Contract examples for 1099 drivers

Discussion in 'Trucker Taxes and Truck Financing' started by RTS, Dec 20, 2013.

  1. Roadmedic

    Roadmedic Road Train Member

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    I dealt with the contractor issue for many years in the accounting industry. The trucking industry is not the only one that tries this.

    It has been a hot issue on many audits through the entire country. I just shake my head when they claim it is legal because he signed the paper.........
     
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  3. Ridgeline

    Ridgeline Road Train Member

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    I am amazed at the number of people who like to copy contracts and don't understand what's in them or how they can effect their liability. When I was at my last IT job, I had to take a course on contractor relations by the legal department in our division, it wasn't a one day thing either. I learned a lot of things that messes up a company quickly.
     
  4. RTS

    RTS Light Load Member

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    Ridgeline
    Thanks for your post, that is exactly what I will do, I was just asking a question about anyone that
    had a contract for 1099 drivers. It was not about is it legal or illegal. Wasn't asking anyone that is not a
    lawyer or the IRS to start telling me there opinions if they didn't agree it. Because there are situations where
    you can have a 1099 and there has situations that you can't. But listen to Roadmedic there is no way possible
    that in these United States of America that anyone could possibly work as a 1099 contractor. Especially go on a rampage and
    tell you how you wrong if you are that. Here is an article about a case in Texas. This is just one of many that
    I have found that can support those that have 1099 contractors.
    Truck Driver was considered an independent contractor and was thus unable to recover his benefits

    by dmhaynie on February 16, 2012 in Uncategorized with No comments
    A truck driver brought an action against his insurer, truck lessor, and truck lessee, seeking to recover benefits under lessee’s accident and disability insurance policy. A district court determined that the truck driver was an independent contractor of both lessor and lessee, and certified the issue for interlocutory appeal. The issue on interlocutory appeal was whether Liney Ryes was an independent contractor of Scout Transportation Services, Inc., or whether he was an independent contractor of Phillip Boudreaux. The answer affects Ryes’s eligibility for benefits under an accident and disability policy issued by BCS Insurance Company.
    There was no dispute that Boudreaux agreed in writing as an independent contractor to lease a truck to Scout. That contract also provided that Boudreaux would provide drivers. Boudreaux in turn orally agreed with Ryes that Ryes would drive the truck for Scout and would be paid a percentage of earnings that Scout paid to Boudreaux. BCS contended that the agreement between Boudreaux and Scout established that Ryes was an independent contractor of Boudreaux only, and that Ryes could not at the same time be an independent contractor of Scout. However, the Fifth Circuit did not view the contract between Scout and Boudreaux to control the relationship between Scout and Ryes. After reviewing the relevant documents in the record and the deposition testimony of the parties, and considering the somewhat unusual tripartite relationship, the Fifth Circuit concluded that Ryes was an independent contractor of both Scout and Boudreaux.
    The independent contractor employment status is determined on a case by case basis in light of the entire record. Courts will consider whether: “(1) there is a valid contract between the parties; (2) the work being done is of an independent nature such that the contractor may employ non-exclusive means in accomplishing it; (3) the contract calls for specific piecework as a unit to be done according to the independent contractor’s own methods, without being subject to the control and direction of the principal, except as to the result of the services to be rendered; (4) there is a specific price for the overall undertaking agreed upon; and (5) the duration of the work is for a specific time and not subject to termination or discontinuance at the will of either side without a corresponding liability for its breach.” Ryes v. BCS Ins. Co., 379 Fed. Appx. 412, 414 (5th Cir. 2010).
    The court found here that the record in this case shows that in addition to his oral agreement with Boudreaux, Ryes entered into an agreement to drive for Scout and represent Scout in the hauling and delivery of freight. Ryes filled out an extensive employment application packet with Scout in order to comply with Scout’s requirements, underwent a physical examination paid for by Scout, and also executed a Driver Contractual Service Agreement with Scout. The Service Agreement, which referred to Ryes as a “contract driver,” established that Ryes was not an employee of Scout, but the agreement was consistent with Ryes being an independent contractor. Id. at 415.
    Consequently, the Fifth Circuit found that Reyes was an independent contractor and thus affirmed the lower court’s decision.
     
  5. Roadmedic

    Roadmedic Road Train Member

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    The reason the court went with the 1099 issue here is simple. Note the word LEASE a truck. This makes it not a contract labor issue.

    There was no dispute that Boudreaux agreed in writing as an independent contractor to lease a truck to Scout.
     
  6. RTS

    RTS Light Load Member

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    Exactly
    That's why I say we must know all the facts.
    ThIs is pretty much our situation.
     
  7. Roadmedic

    Roadmedic Road Train Member

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    You came on here and asked about contract labor and 1099.

    You did not come on here and ask about a leased driver with equipment owned or renting.

    Big difference.
     
  8. RTS

    RTS Light Load Member

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    I asked about a contract for 1099 drivers.
    Remember in that article the driver didn't owned
    Or leased equipment. He was just the driver.
     
  9. Roadmedic

    Roadmedic Road Train Member

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    This is under a different type court than IRS rules.

    This is a civil matter and not the IRS rules.

    "A truck driver brought an action against his insurer, truck lessor, and truck lessee, seeking to recover benefits under lessee’s accident and disability insurance policy. A district court determined that the truck driver was an independent contractor of both lessor and lessee, and certified the issue for interlocutory appeal. The issue on interlocutory appeal was whether Liney Ryes was an independent contractor of Scout Transportation Services, Inc., or whether he was an independent contractor of Phillip Boudreaux. The answer affects Ryes’s eligibility for benefits under an accident and disability policy issued by BCS Insurance Company."


    I am referring to the IRS rules of employee versus contractor. They are not the same.
     
  10. RTS

    RTS Light Load Member

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    Yes they are somewhat the same. I can show you one where a judge rruled different
    because of a different situation and this dealing with the IRS. Also the post you had
    about the IRs rules speaks for itself. You are somewhat determined to put everybody
    that has 1099 drivers/contractors as being illegal. If it was that simple then there would
    Be no question or the IRS wouldn't have certain guidelines. Bottom line is that the government
    especially states for unemployment and workers compensation companies wants to attempt to reclassify contractors for the mighty dollar. As i said I am really waisting my time explaining to
    you because you the know our situation. According to the IRS it is legal, i was attempting to ffind contract to somewhat go by so that I an have file. You assumed it is illegal, you assumed that only
    what you say is correct. We will never agree so by all means Move Around!!!!
     
  11. Roadmedic

    Roadmedic Road Train Member

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    By all means list them.

    The court case that you listed is a civil court case for the driver to try and get workmen's comp or disability for an injury while working.

    As an "employer", you should be very interested in this type of case. The main fighter of this was the insurance company. They stood to lose the most under the court case.

    You as the employer open yourself to the possible reclassification of employees which you have stated could happen.

    I have seen this many times over the years and am only trying to pass the knowledge and experience on so that if you make the decision to go forward with this, then it is done with all available knowledge of risks.

    I have seen court cases that IRS will not even accept from one year to another in their own courts and cases.

    If you are leasing the truck or renting it to them as part of the deal, then they are not a contact labor. They become an independent contractor, because they now have something at risk.

    By all means, read what I have posted. One of them has a contractor issue where they rent the truck and that is okay.

    If you have the documentation in writing, not a phone call, then preserve it by all means. The IRS is one entity that is hard to predict.

    The experiences I have seen where they have stepped in and reclassified a contractor to an employee have resulted in fines and taxes well above 6 figures.
     
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