Transport Labor Contract/Leasing, Inc. & Subsidiaries - Page 10

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          and beverage expenses.  TLC did not pay any per diem amounts to a           
          driver-employee whom it leased to a trucking company client who             
          was not engaged in over-the-road trucking for that client.                  
               At the end of each payroll period,10 each trucking company             
          client mailed or sent by facsimile to TLC a batch control form              
          (batch report) with respect to such period.  For each payroll               
          period, the batch report that each trucking company client                  
          submitted to TLC showed for each driver-employee whom TLC leased            
          to such trucking company client, inter alia, (1) a lump sum                 
          amount (batch report lump sum amount) from which TLC was to                 
          determine the gross wages11 and any per diem amounts to which               
          each driver-employee was entitled but which was not broken down             
          into such component parts;12 (2) the total amount of expenses for           

               10Pursuant to the exclusive lease agreement, each trucking             
          company client had the right to select the payroll period for all           
          driver-employees whom TLC leased to such trucking company client.           
               11We shall refer to the gross amount of wages to which a               
          driver-employee was entitled, prior to any reduction for such               
          driver-employee’s share of Federal and State employment taxes,              
          Federal and State income taxes withheld, and payroll deductions             
          for employee benefits (e.g., health insurance, a sec. 401(k)                
          plan, or a sec. 125 flexible benefit plan), as gross wages.                 
               12Pursuant to each exclusive lease agreement, each trucking            
          company client, and not TLC, selected the method used in calcu-             
          lating the batch report lump sum amount for each driver-employee            
          whom TLC leased to such trucking company client.  Virtually all             
          of TLC’s trucking company clients selected a cents-per-mile or a            
          percentage-of-load-gross-revenue basis as the applicable method.            
          Neither the batch report nor any other document that a trucking             
          company client submitted to TLC showed the breakdown of the batch           
          report lump sum amount between gross wages and any per diem                 
                                                             (continued...)           





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Last modified: May 25, 2011