TN 12 (01-12)

RS 02101.249 Truck Owner Operators

A. Definition of a truck owner operator

A truck owner operator leases his or her own truck (with driver services) to a trucking company to transport freight or haul loads for various companies. Workers in this occupational field drive their own trucks to haul materials, merchandise, and equipment to others. Since their trucks represent a large investment, the owners generally retain some control over their use. The degree of control the owner retains is an important factor in determining the employment relationship.

B. Truck owner operators as employees

A truck owner operator is an employee when he or she:

  • receives compensation solely on hourly wages (or a similar time unit);

  • performs the services personally;

  • accepts all jobs assigned and cannot reject a load;

  • receives the same fringe benefits as other employees of the company; and

  • usually works defined hours.

Usually, the worker and the employer have no written contract. If there is a written contract, it does not specify the worker's relationship with the employer as being that of independent contractor.

C. Truck owner operators as independent contractors

A truck owner operator is an independent contractor when he or she:

  • assumes the main burden of the operating costs (including fuel, repairs, supplies, vehicle insurance, and personal expenses);

  • determines the details and means to perform the services to conform with regulatory requirements, carrier operating procedures, and the shipper’s terms;

  • enters into a contract that specifies the relationship is an independent contractor and not an employee;

  • supplies the necessary personal services to operate the equipment;

  • maintains the equipment;

  • owns the equipment or has a valid lease arrangement; and

  • receives pay for his or her work (including a percentage of any rate schedules or lawfully published tax). The pay is not for the hours or time spent.

D. Control factors for services performed by truck owner operators

Use caution when considering such control factors as designated routes, maximum loads, and driving limits. These conditions may exist only because of State laws or Interstate Commerce Commission regulations. If so, do not use them to establish an employer-employee relationship. Other factors, such as a continuing relationship, payment for maintaining the truck by the owner operator, and a lack of fixed hours exist in both employer-employee and independent contractor cases.

The principal factors that indicate control are:

  • the driver cannot work for others;

  • the driver must perform the services personally;

  • the driver must work fixed hours or be on call;

  • the driver has no opportunity for profit or risk of loss;

  • the driver and the employer may end the relationship at any time without liability; and

  • the employer has the right to instruct or supervise the driver.

Sometimes, employers hire owner operators to do other work, in addition to driving a truck. In such cases, the steadiness of the relationship, consistency of the services, and the activities of the owner operator are usually subject to the right of control by the employer.

E. Rental and leasing income of steel haulers

Truck owner operators who operate under a lease agreement in the steel hauling industry report both self-employment income and wages. These individuals report their income:

  • for leasing their trucks as self-employment income; and

  • for their services as drivers as wages.

The contract between the owner operator and the carrier identifies the owner-operator as an independent contractor. The carrier owns, controls, and uses the equipment. The owner operator drives or furnishes drivers for the vehicles. The carrier pays the owner operator a percentage of the gross value of the load he or she hauls.

The owner operators are members of the International Brotherhood of Teamsters, also known as the Teamsters Union. As members, the owner operators and the carriers are subject to an Iron and Steel Rider to the National Master Freight Agreement. This agreement covers such issues as:

  • wages,

  • pensions,

  • health care benefits, and

  • certain work conditions.

Under this agreement, the employer (i.e., the carrier) reserves the right to control the manner, means, and details by which the owner operator performs his or her services, including the result of the completed work. The carrier agrees to pay Social Security taxes, and to carry workmen's compensation. The carrier issues two checks to the owner operator:

  1. 1. 

    The first check pays wages as a percentage of the total payment amount. The carrier deducts Social Security taxes and withholds income tax from the wages.

  2. 2. 

    The second check is payment for the use of the truck. The owner operator reports this payment as net earnings from self-employment.

The steel hauling industry and SSA accept this practice of divided reporting.

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RS 02101.249 - Truck Owner Operators - 01/06/2012
Batch run: 07/03/2014