Are Owner-Operators also Independent Contractors?


In a recent discussion, someone brought up the pros and cons of paying drivers by the hour.

Specifically, the question asked was, “Are there any concerns or benefits to this method of payment?” and the inquiry was specifically directed at those fleet managers who have owner-operator drivers.

The next 2 – 3 comments had to do with concerns about paying Owner-operators by the hour, because if they are paid by the hour, it is difficult to justify calling them Independent Contractors.

I interjected that, apparently, one or two participants in the discussion were assuming all owner-operators are independent contractors. A response was quickly posted, along the lines of “Aren’t all owner-operators also independent contractors? What other kinds of owner-operators are there?”

The following was my response:

In response to the inquiry: [what other types of owner operators are there, other than independent contractors?]

To me, an owner – operator is a trusted employee / business associate who owns a truck and is therefore responsible for his own maintenance, but who goes where I need him to go when I need him to go there. If he doesn’t follow the DOT safety regulations, I have to coach him / train him / incentivize him to do so, because his actions or inactions reflect on me. While he owns the truck, MY name, DOT#, and advertising message is on the outside of it and my product is on the inside of it.

Back in the 90’s I worked with a guy who had a good group of drivers, and wanted to pay them more.

We didn’t enjoy working with younger or less-experienced drivers or those who did not respect the machinery we used to earn our meager living. We not only wanted to keep the good drivers we had, we wanted to pay people a little more when they did a good job of taking care of our equipment.

 

A couple associates and I figured out a way to encourage guys to take care of machinery and make more money. We offered to sell them the trucks they were driving. Then, we leased them back. We studied FMCSR part 376 which is very directive about how you treat owner-operators, including a contract with a sole-and-exclusive use provision (this clause is directed by the FMCSA).

My wife and I, more recently, purchased some rental property. We hired an independent contractor to do some tile work in the kitchen and bathrooms. The definition of an independent contractor, in my mind, is a guy who is working for me today but – with my blessing – might be working for my neighbor tomorrow. I am paying him a fee for services rendered, which covers his overhead including skills, equipment, office overhead etc. (If he is a skilled practitioner, I HOPE it is enough, because I hope he is still in business next year if I am fortunate enough to require his services again).

Now, I am just a simple country boy and I don’t understand much, what with my public-school education and all, but I don’t see how you can call a truck driver an independent contractor. If he has some value to me a lot of it has to do with knowing my product, knowing his route/area, and taking care of my truck (OK, HIS truck). It is specifically forbidden by the FMCSA for that owner-operator to operate that truck on behalf of another shipper/carrier.

 

I do understand why a lot of people WANT to call drivers independent contractors.

It has to do with not wanting to be bothered with things like:

1. – income taxes,

2. – workers’ comp.,

3 – unemployment,

4 –  social security.

 

And sometimes safety compliance

So this is a big mystery in my mind: if you CALL an O/O an IC, and you trust him to pay his own income taxes, workers comp etc. and if he doesn’t pay those monies in to the proper authorities, and he is injured or killed while is on vacation . . . let’s just say his wife wished to collect social security survivor benefits but is told “He hasn’t paid in to SSI for 7 years”.

Naturally, the widowed wife says, “But he was working for XXX Manufacturing during that period of time – he drove a truck for them”.

Are you sure you aren’t going to have to cough up a big chunk?

Anytime anyone asks me about the whole O/O IC thing, I suggest the following:

1. -be sure you use a contract that complies with fmcsr 376

2 – be sure to consult an attorney

3 – be sure you get an ACORD form showing he/she has Occ Ac coverage.

4 – make sure SOMEONE is taking care of each of the items listed above.

 

As long as SOMEONE is doing it, there is no harm.

But if NO ONE is taking care of some of these things, and you own a building or you manufacture a product, you might be on the hook.

About DOT Compliance Help Inc
Phone: 847-836-6063 web: www.dotcompliancehelp.com e-mail info@dotcompliancehelp.com DOT Compliance Help, Inc. is a full-service consulting firm specializing in the interpretation and execution of the regulations and guidelines set forth by the US Department of Transportation Federal Motor Carrier Safety Administration. •Mission Statement• To assist our clients in establishing proper safety management controls in order to minimize accidents, injuries, and fatalities. The ultimate goals are safer roadways for the public and increased profits for our clients. Our core consulting competencies include FMCSA Assessments (mock audits), DOT compliance training (on-site and via webinar) and custom safety plans and policies. We also hold DOT compliance workshops and conferences all across the country. Utilizing a proprietary curriculum developed by our President, Mike England, our classes cover everything you need to know about the FMCSRs, how to survive your next DOT Compliance Review, and how Comprehensive safety Analysis (CSA 2010) will affect you. www.dotcompliancehelp.com

2 Responses to Are Owner-Operators also Independent Contractors?

  1. I am a single owner operator I am not required to take the D.O.T. compliance but are still getting letters warning me to take this training. I call the phone number to talk to some one and it says no one is handling the calls any more. What am I suppose to do?

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