Workers comp

No company that I know of provides that stuff either to company drivers. Do the driver's route themselves, pay their own tolls, fuel where they want, and select their own loads? That is about the only way a driver will be considered a subcontractor. You are setting yourself to be bankrupted by the IRS. As copie said, they have to have skin in the game, and that doesn't differ depending on the state, that is federal.

I know of one non-owner driver that would pass the IRS test. He drives a company truck, but he books his own freight, pays tolls, and makes 42% of the load, and decides when and when not to work. The owner of the company handles the paperwork and billing. The driver also brought dedicated freight to the company owner. He's older, computer illiterate, and a long time independent owner operator, previous to this gig. He still uses a black book with old school broker numbers in it. I've offered to hire him at the same deal if he ever wants to leave there, and would go buy him a truck today if needed.

 

as an independent O/O in MN, we are waived from having Work Comp insurance in MN.

With that said, some carriers we lease onto do require us to have some is what I have been told by my agent. If that is the case, you can get "minimum" required work comp for $750 to $1000 annually.

How it is for leased O/O I do not know. I can only speak for how it's effecting me.

 

Do you pay your guys cpm or do you pay them a percentage? I spoke with my accountant and if I have to W2 them I would have to pay them per mile to keep costs down.

 

I have no guys anymore, thankfully. I keep getting the itch to buy another truck and hire a driver, then all the negatives from last go round with it smack me in the face (or was that my wife ). I paid my guys .38-.40 pulling flat and reefer. I had under 4 employees so I had a WC waiver as well. Always paid them as employees, paid UC, and I had Occ/Acc policies on them, as well. All told, I was in the .55 cpm range doing it legal paying accessorials. If your guys aren't free to come and go as they please and go from FL to IL via NJ as stated below, they aren't contractors, they are employees and I would rectify that immediately.

I have a friend that got nailed by the IRS for 1099ing and it wasn't pretty at all. He survived, but barely, and almost lost his FL contractor license as well, which would have sunk him. Thankfully the housing boom happened at just the right time for him to rebuild. Had it not, I doubt he would still be in business today.

 

Are we required to have Occ/ACC? I have 7 guys.

 

If you have 7 guys, you will be required to have Workers Comp by the state of FL. It will still be cheaper for you than an IRS audit and reclassification of employees.

 

Better check with the IRS on that 1099, if the driver has no financial stake in the business they will probably say W2

 

My accountant called the IRS and they didn't want to give a definitive answer because that area is so gray.

 

It sounds like you want someone to agree with you, and they aren't going to. It is not a grey area at all. Where you get into grey areas are company lease purchase drivers, however the IRS looks on these from a historic precedent. If your accountant is telling you this is OK, I'd find another accountant. The line you said earlier that their contractors because they provide their own CB's and GPS will make the IRS agent laugh uncontrollably. This is what the IRS does when it reclassifies contractors to employees. First you are liable for all the back taxes, plus interest and failure to file fines, from when it was due. Then they hit you with a few more fines. On top of that, you're going to get nailed by FL for not paying UC and WC. Good luck with that. All it takes is one disgruntled "contractor" or an injured driver going to Morgan & Morgan.