[JarJar]

Owner-operators, and the way the trucking industry uses independent contractors, are under attack.

The latest salvo is President Obama's proposed 2010 budget, which projects that a federal crackdown on the "misclassification" of employees as a tax dodge will yield at least $7 billion for federal coffers over the next decade. To do this, the Obama adminisgtration plans to hire 100 more enforcement personnel to expand its investigations of misclassified employees. The IRS has already started auditing 6,000 companies.

The New York Times, in a Feb. 18 article on the subject, reported that one federal study concluded that employers illegally passed off 3.4 million regular workers as contractors, while the Labor Department estimates that up to 30 percent of companies misclassify employees.

Among the most often misclassified workers, the Times reports, are truck drivers.

The Obama administration's efforts are hardly the only attacks on independent contractors.

In January, the Taxpayer Responsibility, Accountability and Consistency Act of 2009 (S. 2882) was introduced in the Senate by John Kerry. This bill would revise or strike Section 530 from the Revenue Act of 1978 - the so-called "safe harbor" provision that takes into account an industry's historical use of independent contractors. Section 530 has been heavily relied on by the trucking industry in independent contractor classification battles.

States in search of revenue are cracking down, as well. California is one that has been particularly active, especially with drivers serving the state's ports. California Attorney General Jerry Brown has recently won legal judgments against five port trucking firms that the state says disguised employees as independent contractors.

There are also private lawsuits, one of the most recent against Swift Transportation. The class action suit focuses on Swift's lease-purchase program, saying it's just a ploy for Swift to transfer its business expenses to its employees. (Swift has declined to comment thus far on the litigation.)

FedEx Ground has had to prove over and over again to the IRS and in court that its owner-operator delivery drivers are indeed contractors. It has prevailed in two IRS audits. Last year FedEx won an appeal overturning a National Labor Relations Board regional ruling regarding FedEx Ground Home Delivery terminals in Massachusetts. A jury in Washington state also agreed that the drivers were contractors in a class-action suit.

Some of the factors that have helped FedEx in its battle:

Contractors are responsible for their own maintenance, employees, health care, and other expenses.

Contractors are responsible for providing their own trucks. Some buy, some lease, there is no mandated equipment, and they can use the equipment for other businesses, if they choose.

They can sell their routes without having to get FedEx's approval and can run their routes the way they want (no mandated order/sequence of stops).

What can you do? This would be an excellent time to get involved in industry associations that are pursuing this issue, such as the American Trucking Associations and the Truckload Carriers Association's Independent Contractor Division.

You also need to take a close look at your own operations. If the safe harbor provision were eliminated, could you make a legitimate argument that your owner-operators are indeed independent businesspeople?

Unfortunately, there ARE many trucking companies that are doing exactly what the Obama administration and others claim. I've talked to many an owner-operator over the years with a horror story to share, especially of lease-purchase agreements where they truly are little better than indentured servants.

Legitimate independent contractors are a vital part of our business; make sure you're doing your part to help keep them that way.

From the March 2010 issue of Heavy Duty Trucking.

[Heavy Duty]

If they would clean out some of the fleece purchase company's more power to them. They have gotten out of hand. KLLM is in financial trouble and they think the way out is to convert to lease purchase O/O's.

[Dave_0755]

I don't mean to sound like a jerk here but I've never liked the whole idea of O/O's leasing onto a company and not having their own authority. The way I see it is like this. If you purchase a truck with cash or on a payment plan and are responsible to pay fuel, tires, taxes, and other expenses then that truck is your liability. You should be required in my opinion to own your own company and have your own authority. Why would you want to "lease" onto a company that will control you and your ability to do business. You can still lease onto a company even though you have your own authority. Many drivers don't know this. I wouldn't do it in a way to where I locked into a contract with just that company. Meaning I can only pull loads/ trailers for that specific company. It doesn't lessen your load of responsibility to lease onto a company. I guess some drivers feel a sense of security by doing so. I guess the owner of the truck sees security in the company doing administrative work and finding loads for the driver. Most companies offer incentives to a driver for becoming an O/O. Still the truth actually is your just a company driver for that D.O.T authority. The company is the one winning in that situation. They lessen their expenses and pass them along to the owner of the truck. The trucking company that is in charge of the authority is the one in control. The little more pay your getting as an O/O leasing onto a company to me doesn't override the additional costs and responsibilities. A further "sense" of security I guess is felt by some to "lease purchase" a truck from some company. I know for a fact purchasing a truck from the company you lease onto and then make payments to that company is by far the worst situation you can possibly get yourself into. No driver will ever pay off a leased truck. He or she will make payments on that lease purchased truck forever. The interest you pay alone, will be a higher dollar amount than what the truck is actually worth. Some companies offer no interest lease purchases, but they just add several thousands of dollars onto the price of the truck to offset the "no interest loan." A driver with a poor credit score wanting to "own" his or her truck can buy one from the company. This is the same as leasing. It's not too different from leasing a Buick or buying a car from a buy here pay here dealer. You will pay 3 to 4 times what the truck is worth and just continue to make payments as long as they are employed by the company. If you lose your job you lose your truck in most cases. You then can repurchase a truck from a dealer or get a bank loan and start over. Or you can become just another company driver for some other company. To me it should be one of two ways. 1. You can be a company driver and the company you drive for is responsible for all expenses that the truck incurs. 2. You as a business owner can get your own authority and hire drivers or just operate as an independent Owner/Operator of your own company, or you can lease your truck and driver services onto another company. I wouldn't suggest doing so though. I've always had an independent mindset. I've lived on my own since I was 17 and I've made it in this cold and cruel world. I don't ever see me buying a truck and "leasing" onto someone that has a D.O.T. authority. I know if I ever did that and they told me I had to stay out a minimum number weeks or that I was under forced dispatch or that I can only pull their freight at their discression. I would be out the door in a heartbeat. If I'm going to have my own truck and pay for my fuel and my tires it's going to be my choice when, where, and how that truck gets where it's going. Of course this is just my opinion. Everyone has one.

[GMAN]

Boy, these people are going after anything and everything that they can think of to shake down the public. Instead of going after those who didn't pay their taxes they are going after the carrier's. It is much easier to shake down a company than the one's who actually evaded their taxes. I don't like these fleece purchases, either. However, it is up to the individual who signs the contract to take care of their responsibilities. If someone signs an agreement where they are responsible for their taxes, then they are the one's who should be paying them. After the fact, these people want to shirk their responsibility and send the IRS out to collect from the company that gave them what they wanted. This is another way that the Obama people want to control this country and all of the people. I still think that it would be a great idea for every wage earner to sit down and write a check to the IRS each week. Talk about a TEA PARTY!!! :thumbsup:

Instead, they put the responsibility on the back of the employer. What next? Are they going after the contractor who remodels houses? How about the brick layer? Is everyone who writes a check now supposed to sit down and calculate the taxes the contractor is supposed to pay and take out their taxes and add the employers part?

[Orangetxguy]

Originally Posted by Dave_0755

I don't mean to sound like a jerk here but I've never liked the whole idea of O/O's leasing onto a company and not having their own authority.
The way I see it is like this. If you purchase a truck with cash or on a payment plan and are responsible to pay fuel, tires, taxes, and other expenses then that truck is your liability. You should be required in my opinion to own your own company and have your own authority. Why would you want to "lease" onto a company that will control you and your ability to do business. You can still lease onto a company even though you have your own authority. Many drivers don't know this. I wouldn't do it in a way to where I locked into a contract with just that company.Meaning I can only pull loads/ trailers for that specific company. It doesn't lessen your load of responsibility to lease onto a company. I guess some drivers feel a sense of security by doing so. I guess the owner of the truck sees security in the company doing administrative work and finding loads for the driver. Most companies offer incentives to a driver for becoming an O/O. Still the truth actually is your just a company driver for that D.O.T authority. The company is the one winning in that situation. They lessen their expenses and pass them along to the owner of the truck. The trucking company that is in charge of the authority is the one in control. The little more pay your getting as an O/O leasing onto a company to me doesn't override the additional costs and responsibilities. A further "sense" of security I guess is felt by some to "lease purchase" a truck from some company. I know for a fact purchasing a truck from the company you lease onto and then make payments to that company is by far the worst situation you can possibly get yourself into. No driver will ever pay off a leased truck. He or she will make payments on that lease purchased truck forever. The interest you pay alone, will be a higher dollar amount than what the truck is actually worth. Some companies offer no interest lease purchases, but they just add several thousands of dollars onto the price of the truck to offset the "no interest loan." A driver with a poor credit score wanting to "own" his or her truck can buy one from the company. This is the same as leasing. It's not too different from leasing a Buick or buying a car from a buy here pay here dealer. You will pay 3 to 4 times what the truck is worth and just continue to make payments as long as they are employed by the company. If you lose your job you lose your truck in most cases. You then can repurchase a truck from a dealer or get a bank loan and start over. Or you can become just another company driver for some other company. To me it should be one of two ways. 1. You can be a company driver and the company you drive for is responsible for all expenses that the truck incurs. 2. You as a business owner can get your own authority and hire drivers or just operate as an independent Owner/Operator of your own company, or you can lease your truck and driver services onto another company. I wouldn't suggest doing so though. I've always had an independent mindset. I've lived on my own since I was 17 and I've made it in this cold and cruel world. I don't ever see me buying a truck and "leasing" onto someone that has a D.O.T. authority. I know if I ever did that and they told me I had to stay out a minimum number weeks or that I was under forced dispatch or that I can only pull their freight at their discression. I would be out the door in a heartbeat. If I'm going to have my own truck and pay for my fuel and my tires it's going to be my choice when, where, and how that truck gets where it's going. Of course this is just my opinion. Everyone has one.

Ya know..I get really tired of the self-righteous.


In this industry, a trucking company, is a company that owns trucks and operates them on federal, state and local roadways,under what is now "Operating Authority" granted to individuals, groups of individuals, or Corporations, whom secure the proper insurances required by the various federal, state and local governments. Possession of "Operating Authority" makes an individual, a group of individuals, or a Corporation, a "Motor Carrier".

An "Owner Operator", under the current system, is an "Individual" whom owns a single truck or a group of trucks, WITHOUT OPERATING AUTHORITY.

The term "Owned and Operated by" should probably be, "Owned and Driven by", so as not to confuse so many individuals.

A "Motor Carrier" has the ability to haul goods under "Common Carrier" authority (which has been done away with) or under "Contract Authority" (which still remains in effect). A "Motor Carrier" has the ability to sign a contract with a corporation, such as "Dow Chemical", which allows that "Motor Carrier" to place the "Logo" of Dow Chemical on the door(s) of it's trucks9and trailers), accompanied by the terminology, "Operated by; ABC Trucking Company" or "Operated by; XYZ Carriers LLC" or "Operated by; Jona's Ark Incorporated LP".

A "Motor Carrier" (say one structured like Landstar) that does not own "tractors" (that is what TRUCKS are by definition), but leases on "trucks" to pull it's company owned trailers or leases the "truck owner's" trailer(s), is actually, by definition, a "Leasing / Lessor Company".

Now..question...Why would anybody whom has gone through the trouble to jump all the required hoops to gain proper operating authority, chose to "lease" his authority into another "Motor Carrier". Simple answer........shear laziness??

So......If what the original OP posted about, comes to "fruition", all these "Motor Carrier" owners, whom run around the country driving their own trucks, proclaiming themselves as "Owner Operators", instead of "Company Drivers" (which technically and legally they are)....they are going to have to learn new terminology.

And by the way....as an "Owner Operator", my contract, with the company I lease my "tractor" to, stipulates exactly what I am required to do and what I am not required to do, under the terms of my lease. My contract has allowances for "Me" to find work for myself, while still operating under the company's authority and pulling their trailer, should the company fail to offer "Me" acceptable work. That "allowance" stipulates what "I" would be required to do, under such a scenario. And what I would be liable for, under the terms of my contract.

And yes. I have "threatened" to use that stipulation of my contract, and proven to my terminal management as well as corporate management, that I am fully capable of calling qualified customers and securing loads at profitable rates. Once I proved that I understood my contract, and my willingness to make it work for me..most...but not all of the foolishness, ended. Every now and then I have to pull out my "Ugly Stick" (the contract) and beat a dispatcher with it. I am not above reminding a dispatcher or a terminal manager, exactly whom the "Company Employee" is and whom the "Company Business Partner" is. "Business Partner" seems to be the one terminology, that most people forget about, as regards an "Owner Operator".

So.......aside from being a guy who types one long, non-delineated paragraph..............Which classification of driver are you?

1: Company driver for a Motor Carrier you do not own.

2: Company driver for a Motor Carrier, of which you are the principal owner.

or

3: An Owner Operator leased into a Motor carrier.

or

4: An Owner Operator / Lessor, whom employs truck drivers, to drive tractors which you have leased into a Motor Carrier.





IF the Obama administration OR the United States Government (re; Congress), in general, wants to catch tax evaders in this industry, they first must clear this industry, the "Transportation Industry", of everything that it has become synonymous to.................Lieing, Stealing and Cheating.


Until they do that, all they are really doing, is spouting off, for the votes of the "Truck Haters" in general.









rant over

[Orangetxguy]

Originally Posted by GMAN

Boy, these people are going after anything and everything that they can think of to shake down the public. Instead of going after those who didn't pay their taxes they are going after the carrier's. It is much easier to shake down a company than the one's who actually evaded their taxes. I don't like these fleece purchases, either. However, it is up to the individual who signs the contract to take care of their responsibilities. If someone signs an agreement where they are responsible for their taxes, then they are the one's who should be paying them. After the fact, these people want to shirk their responsibility and send the IRS out to collect from the company that gave them what they wanted. This is another way that the Obama people want to control this country and all of the people. I still think that it would be a great idea for every wage earner to sit down and write a check to the IRS each week. Talk about a TEA PARTY!!! :thumbsup:

Instead, they put the responsibility on the back of the employer. What next? Are they going after the contractor who remodels houses? How about the brick layer? Is everyone who writes a check now supposed to sit down and calculate the taxes the contractor is supposed to pay and take out their taxes and add the employers part?

IF, as you state, they are an "EMPLOYER", than they are, indeed, liable for the payment of "income taxes and social security payments". As an "Employer".

As a "Business Partner" they are reponsible for even more.

However....this is the "Transportation Industry" we chat about, thus....Lieing, Stealing, and Cheating, are common and acceptable practices.













sorry.................my rant wasn't quite as over as I thought.

[GMAN]

Originally Posted by Dave_0755

I don't mean to sound like a jerk here but I've never liked the whole idea of O/O's leasing onto a company and not having their own authority. The way I see it is like this. If you purchase a truck with cash or on a payment plan and are responsible to pay fuel, tires, taxes, and other expenses then that truck is your liability. You should be required in my opinion to own your own company and have your own authority. Why would you want to "lease" onto a company that will control you and your ability to do business. You can still lease onto a company even though you have your own authority. Many drivers don't know this. I wouldn't do it in a way to where I locked into a contract with just that company. Meaning I can only pull loads/ trailers for that specific company. It doesn't lessen your load of responsibility to lease onto a company. I guess some drivers feel a sense of security by doing so. I guess the owner of the truck sees security in the company doing administrative work and finding loads for the driver. Most companies offer incentives to a driver for becoming an O/O. Still the truth actually is your just a company driver for that D.O.T authority. The company is the one winning in that situation. They lessen their expenses and pass them along to the owner of the truck. The trucking company that is in charge of the authority is the one in control. The little more pay your getting as an O/O leasing onto a company to me doesn't override the additional costs and responsibilities. A further "sense" of security I guess is felt by some to "lease purchase" a truck from some company. I know for a fact purchasing a truck from the company you lease onto and then make payments to that company is by far the worst situation you can possibly get yourself into. No driver will ever pay off a leased truck. He or she will make payments on that lease purchased truck forever. The interest you pay alone, will be a higher dollar amount than what the truck is actually worth. Some companies offer no interest lease purchases, but they just add several thousands of dollars onto the price of the truck to offset the "no interest loan." A driver with a poor credit score wanting to "own" his or her truck can buy one from the company. This is the same as leasing. It's not too different from leasing a Buick or buying a car from a buy here pay here dealer. You will pay 3 to 4 times what the truck is worth and just continue to make payments as long as they are employed by the company. If you lose your job you lose your truck in most cases. You then can repurchase a truck from a dealer or get a bank loan and start over. Or you can become just another company driver for some other company. To me it should be one of two ways. 1. You can be a company driver and the company you drive for is responsible for all expenses that the truck incurs. 2. You as a business owner can get your own authority and hire drivers or just operate as an independent Owner/Operator of your own company, or you can lease your truck and driver services onto another company. I wouldn't suggest doing so though. I've always had an independent mindset. I've lived on my own since I was 17 and I've made it in this cold and cruel world. I don't ever see me buying a truck and "leasing" onto someone that has a D.O.T. authority. I know if I ever did that and they told me I had to stay out a minimum number weeks or that I was under forced dispatch or that I can only pull their freight at their discretion. I would be out the door in a heartbeat. If I'm going to have my own truck and pay for my fuel and my tires it's going to be my choice when, where, and how that truck gets where it's going. Of course this is just my opinion. Everyone has one.

Dave, most of the people who get into these fleece purchase programs have no discipline. They have poor credit, no money and often little or no experience. They are not willing to work and save their money while they clean up their credit. They want a truck NOW!! It takes a lot of money to get started running your own authority. In addition to your equipment you need to have insurance, authority, base plates and permits, etc. Most insurance companies require 20-30% down and a monthly commitment of around $600 or more in some cases. Running your authority usually requires that you also purchase or rent a trailer. If they buy a truck and trailer they will need a good down payment and good credit or enough to pay cash. If they finance their purchase they will need to make monthly payments. Most are not that disciplined. That is why most of them cannot go out and buy a truck. They must lease a truck through one of these carriers if they want a shot at owning their own truck. The sad part is that they will likely NEVER own that truck. It is more likely that they will lose it and be in worse financial shape than if they had stayed a company driver.

There is nothing wrong with leasing to a carrier. Many who have their authority start by first leasing to another carrier. It can be a good transition. Many owner operators are not good with details. They want to get the load on and off as quickly as possible and are not interested in keeping track of the required paperwork. A carrier must keep accurate records for fuel taxes and other records as required by the feds. If an owner operator pays his own insurance and has his own equipment there is little need for him to give away 25% of the rate just to lease to another carrier. That is what most carriers charge owner operators when they lease on with them. Most carriers don't want to lease to an owner operator who also has his own authority. There are reasons for their reluctance. Some involves liability. You don't want to have two dot numbers on the side of your truck. That is a sure way to gain the attention of any dot officer. I do have a friend who is leased to a carrier but he also maintains his own authority. He has a unique situation. If the carrier doesn't have a load for him and he gets it on his own he can run it under his authority. Most carriers are not willing to allow this when you are leased to them.

There are reasons why people lease to a carrier rather than run their own authority. To start with, they don't have the money to purchase a tire, much less fill their fuel tanks. A carrier will usually give them a fuel advance on each load. Another reason is that they don't have a clue as to how to get a load. Leasing takes care of that problem. The carrier finds the loads for them either though their dispatch office or company agents. Most don't know how to finance their business until the money comes in. They don't have to worry about billing or credit checks or collections when they lease on to a carrier. If they have a breakdown or need a tire many carriers will advance or loan them the money to keep them running. If they run their own authority they don't have that safety net. These people also don't know anything about all the compliance issues that carriers must deal. Logs are only a small part of what carriers much keep track of when they have trucks. It costs a lot of money to stay compliant. 25% sounds like a lot of money, but when you consider the cost of compliance, dispatching, etc., the margins are not as great as it would appear. I have friends who are leased to carriers and are content with their choice. The true independent thinker will probably want his own authority. There are a number of carriers who will allow owner operators to run as they wish. Some want them to operate under a force dispatch system. I think that if you are under force dispatch that you are essentially an employee.

With socialism over taking our country, we are likely going to see a number of changes in this and other industries. Socialism needs a lot of revenue to survive. That means finding more revenue streams from which to extract taxes. It will be interesting to see how these new rules fly.

[Windwalker]

Originally Posted by Orangetxguy

IF, as you state, they are an "EMPLOYER", than they are, indeed, liable for the payment of "income taxes and social security payments". As an "Employer".

As a "Business Partner" they are reponsible for even more.

However....this is the "Transportation Industry" we chat about, thus....Lieing, Stealing, and Cheating, are common and acceptable practices.













sorry.................my rant wasn't quite as over as I thought.

:rofl::rofl::rofl::rofl::clap:

[GMAN]

Originally Posted by Orangetxguy

IF, as you state, they are an "EMPLOYER", than they are, indeed, liable for the payment of "income taxes and social security payments". As an "Employer".

As a "Business Partner" they are responsible for even more.

However....this is the "Transportation Industry" we chat about, thus....Lieing, Stealing, and Cheating, are common and acceptable practices.













sorry.................my rant wasn't quite as over as I thought.

I suppose that I wasn't clear in my reference. When the income tax bill was first passed congress put the responsibility of collections on the employer. Those responsibilities later expanded to include other taxes such as social security tax, Medicare tax, Medicaid tax, etc., It was put on the back of the employer to insure compliance.

It sounds like the IRS wants to shift responsibility of tax collection from the owner operator to the carrier. Obama put a guy in charge of the IRS who didn't pay his own taxes, yet he is going after everyone and everything he can to collect more revenue.

I would like to see the responsibility of tax collection or payment shifted to the taxpayer themselves and away from the employer. Each wage earner should have to sit down and write a check for all their taxes each week when they get paid.

It would be much better to have a flat tax and take the employer out of the equation all together. In fact, the fair tax that has been touted would probably be the best way to go. It would eliminate a lot of compliance costs put on the back of employers. It could also get rid of the IRS. These people just LOVE to bully people.

If an owner operator or driver contracts with a carrier then they should be considered a business partner and should be held responsible for their own taxes. It is the tax evaders who are crying foul and now want the government to bail them out and put the responsibility of tax payments on their former business partner.

Oh, and feel free to finish your rant.

[Dave_0755]

Actually the purpose of of my comment is not to offend anyone at all. I didn't mean to step on toes either. I am not ranting. Only just stating my honest opinion of how I think things should be to create a better mouse trap. The one recurring problem I have noticed since I started trucking is this. Self-responsibility. Most but not all truck drivers have little or none. I am not self-righteous as one posted. I also try not to throw rotten tomatoes towards ones I don't share an agreement with. It's just since I started trucking I see a recurring lack of personal responsibility. Not to say I am the king of responsibility myself either. I made a personal choice about 5 years ago to live a debt free lifestyle. Since then I have grown to absolutely despise debt is all forms. I do not wish to ever be in debt again. Money wise or in debt to where I feel like I owe someone for doing me a "favor." I feel like I am a nice person that is more than willing to help anyone else. That is if they are willing to help themselves. I know I seem self-righteous but I assure you it comes from me taking a different outlook on things. I don't accept the normal "Oh unless I have debt or work for someone that's better off than me then I will never have anything." This is complete bull. We all must work and pay taxes. This doesn't mean that we have to bend over and take it in the backside and smile about it. I don't subscribe to the fact that I must conform to the normal in debt ways to make it in life. We all can do more than what the basic normal acceptable behaviour is. I know it's very hard to become a owner of a trucking company. I know it takes years of saving and cutting corners to start it. I have wanted to own my own trucking company ever since 2000 and I am almost to the point of where I can. I still don't think I'm stable enough though. Eventhough I have cash to purchase a truck and trailer and pay cash for my insurance, plates and all. I will still have enough cash left over to operate for several months with no income at all. Even knowing all of this for some reason I still don't feel completely satisified that I can start and make a profit and that worries me. I am different than most. Most would say f*** it I have $2000 for a down payment and Joe Blow will hire me on as a lease driver so I'm telling my company I'm driving for to jump in a lake. Most will lose the truck and be back being a company driver within a couple of months. Believe me I have talked to more than 30 drivers and the story is always the same. "I bought a truck and tried to own my own business and after 2 months I was about to starve to death. I'm so glad they took the truck back and let me out of the lease agreement. I was scared and I will never do it again." I assure you that will NOT be me.