Are Truck Drivers Employees or Independent Contractors?

The classification of truck drivers as independent contractors or employees is a complex issue that has long been debated in the trucking industry. Trucking companies often favor categorizing drivers as contractors, citing the flexibility and autonomy this status confers. However, many drivers and advocates argue they function more like employees and should receive the protections and benefits that come with this status.

In this article, we’ll delve into the factors that determine whether a worker is an employee or contractor, arguments on both sides of the truck driver classification debate, and recent legal challenges and legislative actions shaping this issue. Getting worker classification right has major implications for taxes, labor costs, benefits, and workers’ rights, so it remains a contentious point between trucking companies and drivers.

Key Differences Between Employees vs Independent Contractors

There are several key factors that legally determine whether a worker is classified as an employee or an independent contractor. These include:

1. Level of control over the work

Employees have less autonomy and are managed more directly by the hiring company. Independent contractors have more freedom in how, when and where they complete work.

2. Ability to set schedule

Contractors can choose their own hours and accept or decline projects. Employees usually work set schedules and shifts.

3. Ownership of equipment and tools

Contractors generally supply their own tools, vehicles and other necessities to complete projects. Employees use equipment provided by the employer.

4. Method and form of payment

Employees earn set wages or salaries on a recurring schedule. Contractors typically bill for projects completed and negotiate their own rates.

5. Formal contract specifying work relationship

A contract outlines project terms for a contractor. No contract exists for an ongoing employer-employee relationship.

6. Benefits

Employers provide employee benefits like insurance, retirement plans, paid time off. Contractors do not receive benefits.

These and other factors help determine whether a worker operates more like an employee under a company’s direction or an independent businessperson contracting services to clients. Misclassifying employees as contractors illegally denies them labor rights and costs taxpayers billions in lost revenues.

Arguments for Classifying Truck Drivers as Employees

Many truck drivers and their advocates argue they meet the criteria of legal employees based on how the work relationship functions. Key points supporting employee status include:

Lack of control over assignments and conditions - Most trucking companies maintain significant oversight of drivers, assigning routes, setting delivery windows and schedules, and enforcing company policies. This leaves little autonomy for drivers.

Use of company equipment - Drivers use rigs, trailers, dispatch systems and other equipment owned by the trucking company, like employees.

Pay based on miles driven or load delivered - Compensation based on production rather than a project bid indicates drivers don't control pay rates.

No retirement, insurance, overtime benefits - Trucking companies fail to provide typical employee benefits like health insurance, paid overtime, retirement plans, disability coverage.

Terminable at will by the company - Drivers can be fired by trucking firms at any time without a contract breach occurring. Employees are also terminable at will.

These characteristics suggest drivers function more like regular employees than independent small business owners contracting out their services. Thus, they should be entitled to fair pay, benefits, collective bargaining and other employee protections they currently lack.

Arguments for Classifying Truck Drivers as Independent Contractors

On the other side, trucking companies defend classifying drivers as independent contractors by highlighting aspects of the work relationship that resemble contracting. Their arguments include:

• Drivers can select routes and loads - Experienced drivers often choose their deliveries and determine the optimal routes. This flexibility indicates contractor status.

• Option to use own rigs - Many drivers purchase or lease their own trucks rather than using a company’s, though motor carriers still maintain standards.

• Paid per project, not time worked - Compensation per load or mile is standard contractor pay structure based on completing a defined project.

• Drivers cover major expenses - Contractors pay for their own fuel, maintenance, repairs, insurance, tolls and other costs. This suggests contractor status.

• Short-term over long-term work - Drivers may work for just one delivery or a limited time period rather than indefinitely, fitting the contractor project model.

• Lack of supervision over work details - Companies have limited visibility into drivers' day-to-day activities on the road. This level of autonomy points toward a contractor role.

Trucking companies argue these factors justify classifying drivers as contractors and overriding differences like lack of benefits. However, relative weights given to each factor remain highly debatable.

Recent Legal Cases and Legislative Actions

Several recent legal challenges and legislative actions are impacting the employee-contractor classification of truck drivers.

California Assembly Bill 5 (AB-5)

Passed in 2019, AB-5 implemented a stricter test for classifying workers as contractors in California. It led to thousands of truck drivers being classified as employees entitled to minimum wage, benefits and job protections.

New Jersey misclassification lawsuit

In 2022, The New Jersey Department of Labor and Workforce Development (NJDOL) Unemployment Trust Fund has received a $100 million payment from Uber Technologies Inc. and a subsidiary after an audit revealed the ride-share companies had incorrectly classified hundreds of thousands of drivers as independent contractors, depriving them of important safety-net benefits like unemployment, temporary disability, and family leave insurance, and failed to make required contributions toward unpaid leave.

FedEx settlement

FedEx agreed to a $240 million settlement in 2022 resolving claims it misclassified drivers in California as contractors. Drivers contested their lack of employment benefits and protections.

These cases exemplify the legal challenges and massive liabilities companies now face over contractor classification. While contractors afford trucking companies cost savings and flexibility advantages, enforcing proper employment classification remains vital for upholding driver rights.

Conclusion

The debate over proper classification of truck drivers underlines the complexity inherent in determining independent contractor versus employee status. Trucking companies favor the contractor model for its flexibility and cost control. However, many drivers operate under conditions that legally resemble employment. Ongoing litigation and legislation continues to shape the standards for classifying drivers and providing associated labor rights and tax obligations. Achieving balance between business efficiency and worker protections remains the overarching challenge as the trucking industry continues adapting to evolving laws.

FAQs

1. What are the main benefits drivers get as employees rather than contractors?

The key benefits employees receive that contractors do not are minimum wage, overtime pay, workers' compensation, unemployment insurance, employer-subsidized health insurance, paid sick leave, parental leave, retirement plans, disability insurance, and the right to organize.

2. Do owner-operators count as independent contractors?

Typically yes, owner-operators who own their own trucks and contract directly with companies or customers function more like independent contractors than employees. However, simply owning equipment does not by itself confer contractor status.

3. Does being an independent contractor give truck drivers more freedom?

In theory, contractor status provides more flexibility in setting hours and declining loads. But in practice, companies place many restrictions on drivers that limit autonomy, despite their contractor label. True independence is still debated.

4. What was the impact of California’s AB-5 law on truck driver classification?

AB-5 implemented a strict test for classifying contractors, which led to thousands of California truck drivers being classified as employees entitled to higher pay, benefits, and labor rights. However, proposition 22 later exempted app-based drivers from AB-5.

5. Are delivery drivers for companies like Amazon considered employees?

Most drivers for Amazon delivery service partners are classified as contractors. However, states like Massachusetts are suing over potential misclassification, arguing these drivers qualify legally as employees. The issue continues being disputed in court.

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Cole, Fisher, Cole, O’Keefe + Mahoney is Central California’s leading workers’ compensation and social security disability law firm. With over 30 years of successful experience, we are committed to securing maximum benefits for our clients in the Fresno, California area. Schedule a free consultation today.