In recent years, many freight forwarding companies, just like ABC Trucking, have been reviewed by state and federal agencies. Agencies like the IRS or your state Workers` Compensation Board can and will challenge the classification of independent contractors. Once a driver is classified as an employee, the transportation company would be responsible for the employer`s share of payroll taxes (6.2% of Social Security, 1.45% of Health Insurance), paid holidays, disability, and the cost of employee compensation. A joint responsibility of $3.7 million was transferred to employer California Cartage Express and CEO Jim Degraw. Although the 24 truckers involved are California Cartage Express employees, a 2016 law allows executives to be held accountable if they violate payroll and labor laws. The additional liability of $2.1 million was assumed by California Multimodal LLC. Different insurance benefits: Employed truck drivers are usually eligible for different types of insurance benefits, so this employment status may be more advantageous for you if you want your business to offset insurance costs. While the cost may come from your paycheck depending on the type of insurance, it may be lower than the one you bought yourself. Let`s take a common scenario in the freight forwarding industry: ABC Trucking works as a motor freight forwarder and classifies all its drivers as independent contractors (IC): Being self-employed is not easy. It is much more difficult than before. There are piles of paperwork, a whole mess of responsibilities, financial obligations and a lot of risk. Customers can be notoriously slow payers, especially for a truck operation.
Slow accounts receivable can be devastating for a single-truck operation. There are still niche markets. The product market, for example, has not been particularly affected by large carriers, as most of their drivers cannot properly track loads and there are large demands for freight. Greater earning potential and more freedom are some of the main benefits of working as an independent contractor. In my 40 years as a truck driver, I have found that working as a freelance truck driver under my own responsibility is definitely the most profitable job I have ever done. Being an independent truck driver involved his own responsibilities, but it was worth having the freedom to choose the equipment I wanted, drive the routes I preferred and enjoy a great victory. Gain or loss of the driver. Since the drivers did not own trucks, they had no “role in the game.” They had no investment in the business and no chance of losing money. They often have an overflow of cargo that they subcontract to smaller or independent carriers. They usually take a small portion of the profits and a freelancer can stay busy during slow freight hours.
Freight forwarders often call their drivers “independent contractors” for a variety of reasons. The first major reason is the tax benefit: independent entrepreneurs are responsible for all of their Medicare/Social Security taxes. They are exempt from workers` compensation by the state. There is also the doctrine of implied tort liability and the transport company is not legally liable for the actions of drivers. However, independent contractor truck drivers are not automatically eligible for many of these insurance benefits. Independent contractors can choose their own health insurance, but their business probably won`t pay anything for it. Many companies also require independent contractors to purchase auto insurance and workers` compensation insurance, giving these drivers the opportunity to look around and choose benefits they enjoy. If the client`s habits are predictable, the freelancer can do the same and take a break at the same time.
Otherwise, it can cause problems. Freedom to choose how you work: For many people, freedom in a job is a huge advantage because much of the day is spent on the tasks of your job. Since as an independent truck driver, you can often choose your own vehicle, jobs, and routes, you have a lot of freedom to create a work environment that will help you succeed. Customers often have high expectations of freelancers, sometimes impossible to meet, such as.B. accelerated delivery times. I recommend that you fully understand the state of the economy and the current health conditions and trends in the freight forwarding industry. You have to love trucking and be ready to be at work. .