Worker's Comp.....

Something else I just remembered. The IRS, under this administration, has been pushing to reclassify owner operators as employees and force carriers to whom they are leased to withhold some of their settlements. Hopefully, congress will step in and stop it before it gets any further. But, I won't hold my breath. It would be a disaster if carriers were forced to withhold taxes from every owner operator. If that happens, I would not be surprised if carriers who lease on owner operators changed their business model to only do business with those who have their own authority. The actions taken by California will have repercussions for them that they may not even imagine. Businesses are already tripping all over themselves to move out of the state. Communists don't really understand how real business works so they think if they can tax all the profits from a business that everyone will be happy. Texas, Nevada and Arizona are benefiting greatly from their continuing burden of over regulations and over the top taxes.

 

If someone is honest and will just admit they do it so they(the employer) makes more, either by less paperwork and/or less money out i would almost believe it. But that is seldom the case.

 

It does save the company on administration or operational costs. It is worth paying a 1099 a little more in order to save some costs on the administrative side. If you only paid on a 1099, companies could possibly save the cost of having a payroll clerk. So, that could be a savings. If I only paid on a 1099, I could use software that would automatically calculate the payroll costs and all they would have to do is write a check for the gross amount, just like with any other vendor. When you need to calculate all those deductions, such as payroll tax, social security tax, medicare tax, etc., it takes time or you need to have software that can do all those calculations for you. After all the deductions, the company will then need to do additional paperwork for the IRS and write two or more checks instead of one. So, in that case, there can be a savings to the company. That is why some prefer paying on a 1099.

 

And it still sidesteps the issue of only the company gaining. Still is done to increase the company at the expense of the driver. Just shows that some of us prefer to pay for a driver and others? Well......

 

The driver and company can both benefit. It may not be for everyone, but works well for others. It isn't just the company that can benefit with a 1099.

 

At the end of the day, it's the driver that decides to accept an offer or not. People with integrity understand their employment agreement before accepting an offer, and don't become victims after the fact.

OP: If you're hiring drivers, do yourself a favor and just W2 them. Regardless of legality (dead horse walking) or whether they like it or not. You can look up on irs.gov what qualifies as a contractor, to see that a hired driver does not meet the requirements. If you decide to 1099 anyway, you'll probably get away with it. Or maybe not. For me personally, it's not worth the risk. But that's what's great about being the CEO - you get to do the risk analysis and then decide what to offer or not.

 

This is how it's done in the expediting segment with small cargo vans and sprinter trucks. You're either a contractor on 1099 paying for the fuel and taking 60% of the revenue or you're an "employee" and not paying for the fuel taking 40% of the revenue. Very gray area considering how most of those guys are practically forced dispatch. And the kind of loaded mile rates they're doing this split on are typically in the dollar a mile range give or take pennies so it's already a cut throat business this exacerbates it.

It sure always seems anyone paying an "employee" on a 1099 is not really doing them any favors. I know of class A drivers right now on 1099 with no benefits turning 3,000 miles a week at 35 cents a mile. Talk about cheap labor. You could pay a driver as an employee on 1099 but the sort of operational freedom you'd have to give them to keep the IRS off your back... ...well it would be very rare the employee that wouldn't run that business into the ground in short order making foolish decisions about where to go.

 

Red, you're probably one of those rare exceptions in that you could pay Aaron on a 1099. Given that he can dispatch himself if need be.

 

I'll say the same thing I always say about a 1099 contractor(employee). If you are in Miami going to Los Angeles and(time permitting)you want to go to Seattle to check your mail then you are a contractor. If you can't do that you are an employee.

 

True. But I'm not going to bet my business on him doing the right thing with the IRS. On the other hand, I have enabled him in a way less likely to attract negative government attention. That is, collecting lumper fees where the customer accepts other than the resident service receipts and he feels like getting some exercise. I helped him set up a FEIN and he files that income as a sole proprietor, coincidentally giving him an avenue to write off stuff he could not as just an employee driver. That, and a handful of cash in addition to what he earns driving.