60/40?/fair?

[greg334]

PJJJJJ

good post and like the analogy


According to some, being that 8.00 an hour cashier entitles them to partial ownership of the store if it has a busy day. After all, they are doing all the work.

Dave, thats the mentality of some here in this area. I worked for the company, so what if I get paid, I want some of that profit... But I won't buy stock in the company or use the product...

 

[arkjarhead]

All I can say is if you nickel and dime your driver, and don't pay them what they are worth you will pay for it in the long run. Then you will be here talking about all you have are crappy drivers. You get what you pay for. I don't think a driver should be making all the money, but they shoudl be able to work and not have to worry about paying the bills.

 

[davekc]

Totally agree. Our folks make out pretty well. Pretty much the reason we don't have a ton of turnover.
But, "you can't give the farm away" either.
You have to have a win-win for everyone involved.

 

[arkjarhead]

A good driver driver should know what a good deal is and not push for more. I agree with you Dave both parties need to be making money for it to be worthwile.

 

[ericmoss37]

My advice to drivers that are unhappy is to buy your own truck and then you will have a better understanding. I drove as a solo opperator for years in the FedEx Ground system. Year after year I would net before taxes around 35K and I worked from 6am to 7pm daily. I loaded my own truck at .3 cents a package and paid for all the expenses. Thank goodness FedEx has been forced to pay much better in recent years. That being said I am lucky to make 10K a year off each truck I run. I am a rather new expedited fleet owner, but I do my best to put my drivers in a position to be sucessful.

1. .45 cents a loaded mile plus Panther paid moves.
2. I take out all the taxes and send the net pay directly to comdata card when the load is completed.
3. I pay for all the fuel.
4. Witholding taxes cost an extra $4,000 a year per driver.
You might ask why I do it then? Because of potential law suits that would cost me much more. Read up on the FedEx Ground case and you know what mean. To be 1099 contractor you must bring your own equiptment to the job or work for two or more companies. You can't just drive for one owner. Example you buy a truck and contract with Panther. You bring your own equiptment and anything from Panther is rented. Now I think most owners are to small of an interest for lawyers, but **** someone off and you can be in trouble.

The driver must refuse some loads to be sucessful in this business. I had one driver that took everything that came across his face. He took even bad fuel supplement runs and to many short runs. Driver and owner should be a team that constantly communicates. I have my drivers call me on the phone about every load they are offered. I don't care if it's 3 am in the morning.

I have another driver that watches the fuel supplement and manages his hours much better. He turned down a 99 mile run that delivered almost 12 hours later. Ten minutes later he got a 600 mile run. I try to give the best advice possible. Hold out until you get at least two big loads and then the rest is the cherry on top. The goal is to reach at least 1700 miles a week per solo driver.

I talked some sense into one of my drivers the other day. He said boss I turned down a 700 mile run. I said really? Yeah he said I did not have enough hours to complete the load. I said grab it because that is Panthers fault for putting you on a load you cant complete. Let them get a cross dock ready and drive as many miles as you can so you can make your miles. My number one concern is my drivers.

 

[greg334]

To be 1099 contractor you must bring your own equiptment to the job or work for two or more companies. You can't just drive for one owner.

I don't get this part.

As it was explained to me a while ago and practiced for a while when I had to hire contractors, 1099 contractors have some limitations, equipment was not one of them. Equipment can be provided by the person who contracts you to do the job, in the case of an IT professional who is contracted to do some programming, the equipment is the computer.

In the case of the driver, you are contracting them for their qualifications and skills, not the equipment. In turn you can't provide benefits like educational reimbursement or even pay for them to get their CDL if they need it.

 

[ericmoss37]

Greg check you local laws.. Look it up on the internet. What qualifies as employee verses independent contractor. Each state has different laws it's a fine line. Even though contractors at FedEx Ground/Home Delievery brought their own equiptment to the job FedEx had to much control over owners work day. If your sick and can't drive they needed to find another qualfied driver or have your contract terminated. It's impossible to keep a driver on the sidelines. They have to be qualifed by Fedex or you can't use them. They must pass a FedEx Road test and they decide who passes and fails.

 

[Turtle]

The Truck Pay, People Pay, Time Pay thing sounds all well and good, but Detention really should go to the driver, in most cases. I think, anyway. Real time is lost to the driver, where he not only has no other earning possibilities, but he also losing personal time to do with as he sees fit. Lost revenue opportunity affects both the driver and the truck, but it's just that, opportunity, and it's only a possible opportunity, at that. If you were to go to court on some small claims case you would not be able to claim money for lost revenue opportunity possibilities, but only for actual, real losses. One would have to show that not only did the detention cost the truck real, actual revenue for a specific load, but that no other load was offered in its place. Anything else is pure speculation. If it's a case of the truck sitting at a cons for a few hours waiting to get unloaded, or unloaded and sitting at a truck stop for the same number of hours, no real revenue is lost to the truck, but the driver has incurred real, actual losses.

Not that I think Leo is trying to rip off his drivers or anything of the sort. I'm sure he's more than fair with his drivers, and I have no idea of the particulars of other pay outs with his drivers. His system seems to work for both him and his drivers. But it's something to keep in mind.

 

[davekc]

I think Turtle has a valid point with regards to detention time IF it is looked at just by itself. In some owners cases, they actually should. I do take a percentage, but I look at is as a issue of balance. The drivers time is clearly being used, and both are denied a opportunity, perceived or not, when the truck is tied up.
In our case, I balance that with empty moves which I take nothing (truck doesn't go down the road for free), and when I book loads to minumize deadhead in which we both benefit. The driver by proportion benefits more in those cases even though I locate the load. So.....for me it is a trade off.

 

[greg334]

Greg check you local laws.. Look it up on the internet. What qualifies as employee verses independent contractor. Each state has different laws it's a fine line. Even though contractors at FedEx Ground/Home Delievery brought their own equiptment to the job FedEx had to much control over owners work day. If your sick and can't drive they needed to find another qualfied driver or have your contract terminated. It's impossible to keep a driver on the sidelines. They have to be qualifed by Fedex or you can't use them. They must pass a FedEx Road test and they decide who passes and fails.

I been around the block on this issue several times as a contractor and as an business owner, it is not just a state issue but crosses federal laws. There is a lot of ambiguity with who can do or say what and it is far easier to say a 1099 is a contracted person for a specific job, in this case it is a driver who has to follow DOT and state laws.

FedEx contracts and qualifications are clear, just like the Postal service so if you can't fulfill the contract, they terminate your contract. This is not a 1099 issue, it is a contractual obligation issue. The postal service is another one that is really a pain in the a** when it comes down to having a driver do the work.

I understand what you are getting at but FedEx is one company that has had their hands slapped hard lately and knowing that they were not following the rules, there needed to have some legal intervention. I think that their control in how the drivers ran their routes was stepping over the line but I also know that they are trying to mitigate future problems.

 

[davekc]

With regards to equipment, it is listed at the irs site (Internal Revenue Service) as a component to determine status, but is not used exclusively for a conclusion.

 

[ericmoss37]

Just from experience I get good drivers that refuse to go to work for owners that make them pay for the fuel. They also love the fact that they are not going to be upside down owing taxes at the end of the year.

 

[LDB]

I do the same as Dave, giving all d/h or empty move to the drivers even though it costs me money every mile they roll. When I'm on detention time in my own truck I can read, talk on my ham radio, nap, check email/forum and other things that I do on my own time when I'm not being paid detention money to do them. Yes, the driver's time is positively being taken, as well as their potential opportunity time and my potential opportunity time. I'd hope they have hobbies and things to occupy their time during the many many hours of unpaid time we all have and will pursue and enjoy them during paid time like this as well. I'd also hope they're equitable enough to agree that splitting pay for time is fair.

 

[ericmoss37]

Trucking Industry
Example. Rose Trucking contracts to deliver material for Forest Inc. at $140 per ton. Rose Trucking is not paid for any articles that are not delivered. At times, Jan Rose, who operates as Rose Trucking, may also lease another truck and engage a driver to complete the contract. All operating expenses, including insurance coverage, are paid by Jan Rose. All equipment is owned or rented by Jan, and she is responsible for all maintenance. None of the drivers are provided by Forest Inc. Jan Rose, operating as Rose Trucking, is an independent contractor. I.R.S example.

Don't get me wrong I like 1099's and the trucking industry will crash if owners can no longer use them. That is Fedex's argument for justification of their model.

 

[davekc]

Just from experience I get good drivers that refuse to go to work for owners that make them pay for the fuel. They also love the fact that they are not going to be upside down owing taxes at the end of the year.

Two issues.
The first with regards to a say a 40/60 would depend on the carrier and their FSC. If, and I say if, you are talking Panther, I can garantee you the driver loses in that scenerio. Just simple math unless they are deadheading all over the country.

Second. If the driver is paying fuel, and has their receipts and supporting documentaion, they aren't paying additional tax.

 

[ericmoss37]

First of all my trucks have been held more then two hours before and Panther refused to pay detention time to the truck. It was one of the oldest customers and they did not want to make them angry. Second they rarely ever pay empty moves. Getting drivers out of the Boston area is most likely going to be a deadhead deal. Most of the time they sit for a day or two and then I have them head west and they book the truck right back into the same area. I have my drivers turn around at certain points now to keep them in the midwest. It seems really hard to get back loads in a straight truck. I call freight brokers all the time.

 

[davekc]

Couple of issues.
For just figures
Say for illustration.....1.30 per mile and .45 FSC. We have had .70, 72, 62, 49, 38, for this week.

1.30 at 40 percent = .52 per mile
Same scenario at 60/40 +FSC = .78 +.45FSC=1.23
On a 1000 mile run, one makes 520
The other on a 60/40 makes 1230 but has a fuel purchase.
At 8 mpg and 4 per gallon, you have 500
Subtract 500 from 1230 and you have 730.
The difference is 210 on this one run. How far are you deadheading? That is assuming you got paid nothing. On 210,
You could deadhead roughly 400 miles per every 1000 just to break even. Better pull the calculator again and do some figuring.


Additionally, why wait in Boston? There are loads everywhere up there. If not, head to CT or down to the tri-state area. There are pages of loads out of that area. If they send a load back, then turn it down if you can't move them.
If Panther refuses to pay the detention time, ask for a supervisor. I wouldn't care if it is the Pope. They refuse, the load comes off where it sits. That sounds like a lazy dispatcher who can't pick up a phone and call a customer.
I would also be mindful that it is "their" customer that we are contracted to service. Some get that confused.

 

[pjjjjj]

Second. If the driver is paying fuel, and has their receipts and supporting documentaion, they aren't paying additional tax.

Dave, can you explain this? I believe Eric is talking about the driver's owing income tax. Are you talking about income tax or fuel tax in the paragraph above? If income tax, how do you figure the driver's don't have to pay income tax? I think Eric is saying his drivers appreciate the fact they don't owe a big whack of income tax at the end of the year.

 

[davekc]

Fuel would be considered a operating expense that would be written off. The same with your fuel tax.
The 60/40 guy will pay alittle more in tax because he made more. Roughly 12k to 15k in additional net income depending on milage. Ones tax are based on the net, rather than the gross.
It could put you in a higher tax bracket because your making more, but many factors come into play at that point.

But, this would be a case of one refusing a raise because they are making more.

 

[pjjjjj]

Eric is paying his drivers as 'employees', so he takes the income tax right off the top of their pay (I think?).. so that's gotta be nice for the driver to not have to worry about that big debt at income tax time. (Of course, they'd have to be making a profit in the first place, to owe any - nevermind, they're getting 'pay', so it's all 'profit', it's the owner who needs to worry about the real profit in this case)