A minefield worth crossing

Avery Vise is editorial director of Commercial Carrier Journal. E-mail [email protected].

If you want to break the ice at a gathering of trucking company owners, mention owner-operators. Some executives see owner-operators as the backbone of the industry and tomorrow’s trucking leaders. Others see them as typically lacking in business sense and perhaps even a menace to the industry.

A few points are clear, however. Independent contractors allow many carriers to free up capital, focus on core competencies or relieve themselves of certain financial obligations. Even carriers that might not hold owner-operators in high regard often still use them, perhaps to obtain capacity on a pay-as-you-go basis to meet peak demand.

It’s also a sure bet that no owner-operator sets out to fail. A few undoubtedly are utterly clueless and stubbornly insist on remaining that way. But while an owner-operator may be wrong in thinking that he has all the answers, he still expects those answers to deliver success. The same could be said, of course, for many trucking company owners.

Trucking companies benefit from owner-operators’ success. Surely, a contractor who is making money is more likely to stick with you than one who isn’t. True, his success or failure depends primarily on his own decisions regarding driving habits, equipment management and lifestyle. But you can bet that an owner-operator who hits dire financial straits will blame you. If you help independent contractors be more successful, you can expect lower turnover, better customer service and a host of small improvements that come with a good attitude.

From a broader perspective, the industry has an interest in having owner-operators operate intelligently and profitably. In an economic boom, owner-operators often grow larger and seek their own customers. If they never learned the basics correctly, these operators can cause trouble, especially for smaller carriers, by pricing in ways that don’t make business sense.

How can you help? You could offer business education to new contractors or offer bookkeeping, tax or financial consulting services through your own certified public accountant or another party. You could offer independent contractors access to your buying power on items like maintenance, tires and lubricants. And although it can be a little trickier with contractors, you may be able to offer access to retirement plans and competitive health insurance.

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Some carriers shy away from working closely with owner-operators due to legal complexities and a litigious environment. Carriers must navigate their way through at least three sets of legal obligations: Federal truth-in-leasing regulations, Internal Revenue Service policies governing independent contractors and Department of Transportation safety regulations. State laws can further complicate matters in areas like workers comp.

Strict adherence to one set of rules could put you in conflict with another if you aren’t careful. DOT regs stress your responsibility for the safety of all trucks operating on your behalf, while IRS guidelines limit the amount of control you can exercise over independent contractors. Well-intentioned efforts to help owner-operators can run afoul of the leasing regulations.

In many cases, you can solve these problems with minor changes in contracts and business practices. You need to review your contract periodically anyway, especially if you borrowed language from another carrier. Experienced transportation attorneys or trade associations can help. Don’t cut corners in this area. Your neighborhood attorney or CPA might understand IRS rules but have no clue about the complexities of the leasing or safety regulations.

Don’t let the legal traps deter you from trying to help independent contractors become more successful. Finding creative ways to help owner-operators succeed takes effort, but the benefits can be worth it.