April 22, 2011

Dear NJGCA Member:

Here's what you'll find in this edition of the NJGCA Road Warrior, and thank you for reading:

EXECUTIVE DIRECTOR'S MESSAGE: GREETINGS & SAL-UTATIONS!
•Labor Fraud: Avoiding overtime for your employees, paying off the books, and ignoring minimum wage - The Heat is on! Trenton and Washington are stepping up efforts to investigate your payroll.
And...Happy Easter!

NEWS AROUND THE STATE
•Fuel efficiency a priority for carmakers at new-model unveling
•NJGCA in the News: Tapping The Strategic Oil Reserve Is Bad STRATEGY
•NJGCA in the News: As gas rises toward $4, Sal talks about possible fuel price drop
•As fuel prices rise, motorists cutting back on driving

A SPECIAL MESSAGE FROM BELLOMO FUELS
•Serving New Jersey since 1910 -- Over 100 years of supplying gasoline retailers like YOU!

TRAINING CLASS SCHEDULE
•New Class Added: NJ EMISSION INSPECTOR TRAINING CLASS

POLITICAL PARTICIPATON: THE NJGCA PAC
•Participate in the NJGCA PAC today and help us keep our Agenda rolling in Trenton!

THE MEMBER TOOL BOX
•On the NJGCA Homepage
•Know your Territory Manager!

 EXECUTIVE DIRECTOR'S MESSAGE: GREETINGS & SAL-UTATIONS! 

LABOR FRAUD: AVOIDING OVERTIME FOR YOUR EMPLOYEES, PAYING OFF THE BOOKS, AND IGNORING MINIMUM WAGE----THE HEAT IS ON!  TRENTON AND WASHINGTON ARE STEPPING UP EFFORTS TO INVESTIGATE YOUR PAYROLL.
AND…..Happy Easter!

When you get caught doing something wrong, it seems that everyone eventually comes around to say they’re sorry for what they’ve done and that they should’ve known better.  Of course that moment of clarity and moral-enlightenment always comes AFTER you’ve been punished.  With last week’s Passover celebration now concluded and the Easter festivities only a few days away, there certainly is something admirable to be said about redemption and reaffirming one’s principles. 

Of course, if you really want to avoid getting caught, I invite you to follow the humble advice of many indicted and incarcerated (former) New Jersey politicians who eventually atone for poor past behavior: Don’t do it in the first place!
 
That sure sounds easy doesn’t it?  Just do right and don’t do wrong!  Follow the rules and you’ll have nothing to worry about!  Yet in the business world, what do you do when ‘everyone is doing it’ and you feel that technically breaking the law is okay when ‘it’s a pretty common practice’ in your industry?  Following the rules in these situations may not be easy, but it doesn’t make it any ‘less wrong’ to break the law.  I am trying not to preach, as I was in your shoes for 23 years, and also went along with payroll practices that may not have held up to scrutiny in an official audit.

I was planning to discuss the NJ Department of Labor (NJDOL) in this week’s Road Warrior, and then several things happened that made it more important.  Read on and I’ll explain why I planned this discussion today, even before I learned that the US Department of Labor (USDOL) sent out a press release announcing how prevalent the problem is in New Jersey gas stations.  At the same time I learned frommy counterpart in Maryland that the USDOL has also targeted Ohio gas stations.

What did he have to say that’s got me thinking about right and wrong?  Everything it seems. 

You’ll recall that NJGCA notified you twice in December that the USDOL has begun an initiative to aggressively audit gas stations, conducting raid style investigations to determine if owners were guilty of committing labor fraud.  Their tactics were often described as being intimidating yet thorough, often taking extra time to determine how a business is being operated and if there is anything suspicious afoot. 

You can read more on this topic by clicking HERE to read the December 3, 2010 edition of the Road Warrior and clicking HERE to review the Road Warrior for December 10, 2010.

What’s now newsworthy is that USDOL is expanding their activities nation-wide and all New Jersey stations are being targeted in their investigation.  That means a USDOL official may visit your shop with 3 or 4 agents.  They may shut down your business if necessary, segregating employees and questioning them separately to ferret out any inconsistencies.  They’ll ask them how many hours they work, what hours the station is open, and what other employees they work with.  Then they’ll compare those answers to your payroll records and ultimately question you on what they find.  They may even interview customers to ask how long an employee has been working at the location.

It is important that you read the USDOL press release issued two days ago.  Here is only one sentence in the USDOL press release …."the division previously found consistent and widespread noncompliance with the federal Fair Labor Standards Act. This initiative is part of the division's goal to achieve sustainable and systemwide compliance in industries with high concentrations of vulnerable workers.” Click HERE to read the entire USDOL press release.

The reason I had planned today’s discussion even before I learned of the USDOL press release was because of a recent meeting I had with officials from NJDOL.  They reiterated that they are ramping up efforts to uncover any unemployment fraud.  Why?  Well it seems that a lot of people are trying to work off the books, but still collect an unemployment check.  Working for a gas station under the table to supplement an unemployment check may seem like a minor infraction to some, but let me tell you, when hundreds (if not thousands) of people are doing it, it ends up costing taxpayers a lot of money!

Yes, I know what you are thinking: It’s a pretty common practice in the gasoline retail business to hire someone off the books, or employ someone who is an illegal immigrant, or pay a regular employee on the books but pay them in cash for overtime.  I get it; let me repeat, I was in your shoes not long ago and I know the temptation this kind of scenario creates.  After all, on its face, it seems pretty advantageous for both the small business owner AND the employee.  The business owner gets to save on the wages paid to the employee and on business taxes.  The employee gets to avoid paying payroll taxes, leaves work with tax-free money in his/her pocket, and may also get to continue drawing a taxpayer subsidized unemployment check.  Or maybe you’re a bit more sophisticated than this.  Perhaps you’re simply classifying your employees as salaried employees in order to avoid paying them overtime, even if he/she doesn’t qualify as a salaried employee.  These are only little tricks to help you balance the books, right?

I understand how this works and I know some of these practices are very common in our industry --- but times are changing, and both Trenton and Washington are determined to end the practice. This kind of focused attention isn’t good for your business, our association, or the industry at large.  About the only thing that IS GOOD about it is that it slaps the dishonest guy down the street who is gaining an unfair advantage over you.

As I stated back in December, and as I reiterate now, in the past NJGCA and USDOL have had a very cooperative relationship.  I don’t anticipate that changing.  In fact, though I suspect that many of you know the basic rules, we've reached out to USDOL to see what we can do to help educate you on proper procedures and avoid problems if they come to audit you. 

Here is what we found:

Hours of Operation & Employee Hours: A Department of Labor audit will be based on the number of hours the business is open for business and how many people are needed to run the business during the hours of operation.  The employer/owner will have to prove he has paid employees during all hours of the business being open. 

For example:  Let’s assume your business is open Monday to Sunday, 6:00am to 10:00pm.  The number of hours in which gasoline is being pumped has to be covered by hourly paid employees.  Does your business use time cards?  Do you employ a set schedule?  DOL will want to know and want you to explain it!

DOL will also check for:

Workers Compensation Insurance
Payment of Disability and Social Security Taxes
Unemployment Insurance
New Jersey Minimum Wage payments ($7.25 per hour since July 24, 2009)
Proper overtime is being paid to workers (*** this point is being pursued very aggressively)
If you have withheld wages (It is illegal to withhold wages for cash register shortages)

In managing your employees, you should consider the following:

1). Employers should consider all of their employees as hourly.
2). Employees who work more than 40 hours a week MUST RECEIVE OVERTIME PAY
3). Department of Labor requires you to pay overtime based on hours worked PER WEEK. That means you CANNOT pay for more than 80 hours in a two week period.
4). Salaried Employees -must meet certain criteria, is based on the employee's specific duties, and paid more than $455.00 per week.  NOTE: The $455.00 per week excludes food/ board/lodging/etc.
5). Employees who are paid salary of $455.00 or more cannot have a deduction for jury duty or temporary military service
6).  A Salaried Employee must have a primary management duty and must be included in decision making, including the authority to hire, fire, promote OR their recommendation must be given significant weight by the owner.
7). Salaried Employees must be able to direct/supervise work of two other full time employees.
8). How does an owner establish that an employee must be salaried?  By using documents; draft  job description for employee; include specific duties; and have employee review and sign it.
9). Salaried employee must be related to management, general operations of employer’s business, or employer’s customers.

Just as I filled you in immediately after learning of this situation back in December, I am instantly updating you on it as I’m learning new facts today.  That’s my job, I take it very seriously, and you need to be alerted that these activities are taking place. 

Please keep in mind that, no matter what you’ve heard or who you heard it from, whenever you cheat the system, it is only a matter of time before the authorities find out and the consequences can be utterly brutal.  Rather than employing illegal immigrants, paying people off the books, avoiding overtime pay, or paying folks who YOU KNOW are also collecting unemployment, its in your better interest to just avoid the headache in the first place.  It is far easier (and less stressful) to be honest and follow the law than it is to hide this behavior.  It isn’t hard to figure out in an audit or questioning and it certainly is less embarrassing than having your neighbors and customers see that you’re facing possible legal problems for some kind of misconduct you could have easily avoided.

I’m very proud of the fact that the average NJGCA Member is a cut or two above the rest of the industry in terms of professionalism and conduct.  But I also know that times are very tough out there and you maybe tempted to try to use similar tactics to get by.  I must very strongly warn you not to employ ANY of these practices, continue to run an honest operation, and keep in compliance!

If USDOL visits you, please alert me immediately.

As a parting thought on this topic, I’d like to remind you that NJGCA has signed up a new service to help you conduct background screenings on new employees.  That company, MeSH, creates in depth reports keep the bad apples from spoiling your business.  If you’d like to take advantage of this service and find out all there is to know about a potential employee, call Membership Services Director Debbie Hill at 973-376-0066. 

Many of you have already received (or are about to receive) the latest edition of our On The Road communication in the mail. We’re especially proud of this installment, so please be sure to read through it and take notice of some of the important information packed within.  In fact, you can also read more about the services provided by MeSH by reading a piece they penned on page 30.

If you haven’t received your copy of On The Road yet, and would like a sneak peek, click HERE to take a look.

I don’t know if you’ve been keeping up with the news lately, but we’ve been making a bit of noise in the press lately.  Please see a few important articles below in our News Around the State section and check out a CBS News segment I appeared on recently by clicking HERE

Last but not least, on behalf of all of us at NJGCA, we’d like to extend a very Happy Easter to you and your families -- Enjoy the festivities and your loved ones!

Thanks for listening - See you next week!

Regards,
Sal Risalvato
Executive Director

NEWS AROUND THE STATE

4/21/2011:
Fuel efficiency a priority for carmakers at new-model unveling
As the price of gasoline continues to rise, automakers unwrapped a number of new, fuel conscious products this week at the New York International Auto Show.  However, unlike in years past, fuel efficient vehicles are no longer limited to the compact and subcompact segments.  Midsized vehicles such as the new Chevrolet Malibu and revised Ford Taurus are now significantly more fuel efficient than models they replace.  Click above to read more on some highlights from the auto show.

4/20/2011:
NJGCA in the News: Tapping The Strategic Oil Reserve Is Bad STRATEGY
An Opinion-Editorial written by NJGCA Executive Director Sal Risalvato was recently published by NJToday.net, arguing that any attempt to tap the Strategic Oil Reserve in an effort to lower the price of gasoline would be ill advised for many reasons.  Click above to read the full Opinion and let Sal know what your thoughts are!

4/19/2011:
NJGCA in the News: As gas rises toward $4, Sal talks about possible fuel price drop 
Executive Director Sal Risalvato spoke with the Burlington County Times reporter Peg Quann on what to expect as the price of gasoline inches closer to $4 a gallon.  Sal anticipates that prices will not rise much above the $4-mark as motorists reject the price, causing a sell off and forcing prices to drop.  Click above to read more on what Sal had to say.

4/11/2011:
As fuel prices rise, motorists cutting back on driving
With the summer driving season quickly approaching, Americans have purchased less gasoline than a year ago for the fifth week in a row.  The decline represents a 3.6% drop in demand for fuel according to a March survey conducted by the Oil Price Information Service.

CLICK HERE TO READ MORE ARTICLES IN OUR “NEWS AROUND THE STATE” ARCHIVE