Independent Contractor Drivers vs. Employee Drivers

By Jonathan Mazer, Esq.

Independent drivers working as contractors have been a feature of trucking and other fleet-based industries since long before the gig economy. The emergence of Uber and other app-based companies has sparked interest in organizing — or perhaps re-organizing — a fleet based on an independent contractor model, rather than an employment model for affiliated drivers. The financial obligations and other aspects of the relationship (payroll taxes, workers compensation, etc.) differ significantly for employees and independent contractors. Consequently, business owners should follow the law and best practices when setting up and managing relationships with drivers. The goal is to leverage the many potential advantages of working with independent contractors and avoid the pitfalls.

What does this mean for fleet operations?

If you are starting a fleet-based business, you must choose whether to work with employee drivers or contractor drivers. If you operate an ongoing fleet business, you’ll need to evaluate making this shift. Working with independent contractor drivers will be less burdensome financially, in many respects. Note you have less control over how the drivers carry out assignments.

In contrast, employee drivers are easier to manage.

Operational and scheduling considerations are paramount. Can the business succeed if the contractor drivers are free to reject assignments? Who will pay for the vehicle, its maintenance and storage? What rules may be imposed on drivers? How can they be disciplined for violating them and by whom? Who will pay the insurance premiums? Who will be responsible if there is an accident? How will disputes with the driver be resolved?

Business owners must address these questions, among others, with an attorney before making a move to change to or establish contract driver relationships. It’s very important to discuss these points with a lawyer, because the financial consequences for misclassifying workers as independent contractors can be catastrophic.

About the Author:

Jonathan Mazer, partner at Schlam, Stone & Dolan, has represented various ground transportation businesses including black car dispatch bases, messenger businesses, and airport transport businesses and related trade organizations in a variety of disputes before the courts and administrative tribunals. Many of these disputes concerned the independent contractor status of the worker affiliated with the dispatcher. This issue is being presented with increasing frequency by the growing number of gig economy workers who receive referrals for a wide range of jobs via phone apps.

 

 

 

Category: General Update, News