Independent Contractor or misclassification?

DRIVERDUDE

Seasoned Expediter
Many years ago I worked for a courier company that got busted by the IRS for paying the drivers as ICs. The IRS said that since the company told us what hours we had to work, what kind of clothes we had to wear (we had to wear dress pants and ties because most customers were lawyers), had to work for them exclusively, and deducted workman's comp from our check, that we were considered "statutory employees". We got paid on a "per run basis". When we received our checks, 50% was taxed as salary, and 50% was considered commission and not taxed. We got W2s and 1099s at the end of the year. It helped on taxes but cut back on our vehicle expenses. I don't know if they still do that because I left shortly after they syarted doing that.
 

runrunner

Veteran Expediter
Many years ago I worked for a courier company that got busted by the IRS for paying the drivers as ICs. The IRS said that since the company told us what hours we had to work, what kind of clothes we had to wear (we had to wear dress pants and ties because most customers were lawyers), had to work for them exclusively, and deducted workman's comp from our check, that we were considered "statutory employees". We got paid on a "per run basis". When we received our checks, 50% was taxed as salary, and 50% was considered commission and not taxed. We got W2s and 1099s at the end of the year. It helped on taxes but cut back on our vehicle expenses. I don't know if they still do that because I left shortly after they syarted doing that.

I bet that outfit got slammed by the IRS,for not taking taxes out of commission's. I think it would be just like a bonus,they take tax. You can't be both an IC and employee.
 
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zorry

Veteran Expediter
I bet that outfit got slammed by the IRS,for not taking taxes out of commission's. I think it would be just like a bonus,they take tax. You can't be both an IC and employee.

He probably was an employee given vehicle expenses.
At AAG when I hauled trucks I was an Owner/Driver.
I owned and drove the truck.
I was an employee. I got full Teamster benefits, 100% paid by AAG. Same as a guy at Roadway,etc. This was a W-2
I got a truck check. This was 62% of the frt charge. Minus the wages. This was on a 1099.
Example: Mi to Ca.
Frt charge $10,000
Truck check $6200
Minus $2400 drivers pay

So the trip to Ca paid me $3800 to the truck on a 1099 and $2400 to the driver on a W2.

AAG took care of the taxes,benefit costs. We got unemployment during layoffs.

They also paid our plates, FHUT, prorated to how much we worked.

It was profitable for all involved. The low ball carriers couldn't provide the timely, damage free service of well trained,seasoned professionals with the proper equipment.

We're not doing it because GM exited the medium duty market.

It was a sweet ride. Ten years. :)
 

DRIVERDUDE

Seasoned Expediter
The IRS told them to pay us that way. I owned the vehicle and bought my own gas. What got them busted is them telling the drivers when to work, what to wear, and the fact that we couldn't drive for other companies. It's like they owned us.
 

runrunner

Veteran Expediter
He probably was an employee given vehicle expenses.
At AAG when I hauled trucks I was an Owner/Driver.
I owned and drove the truck.
I was an employee. I got full Teamster benefits, 100% paid by AAG. Same as a guy at Roadway,etc. This was a W-2
I got a truck check. This was 62% of the frt charge. Minus the wages. This was on a 1099.
Example: Mi to Ca.
Frt charge $10,000
Truck check $6200
Minus $2400 drivers pay

So the trip to Ca paid me $3800 to the truck on a 1099 and $2400 to the driver on a W2.

AAG took care of the taxes,benefit costs. We got unemployment during layoffs.

They also paid our plates, FHUT, prorated to how much we worked.

It was profitable for all involved. The low ball carriers couldn't provide the timely, damage free service of well trained,seasoned professionals with the proper equipment.

We're not doing it because GM exited the medium duty market.

It was a sweet ride. Ten years. :)

Yes that makes sense, if you had a driver, driving for you, he would have got the W-2, the benefits,and driver pay, you would have got the 1099, and the percentage pay, minus the drivers pay.
 

zorry

Veteran Expediter
Runrunner,you are 100% correct. Under the AAG deal we were only allowed one truck, owner driven.
Multi truck owners are problematic.
We wanted a level playing field before having a level playing field was cool.
 
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zorry

Veteran Expediter
In the AAG situation we were employees.
We had forced dispatch.
We had enough freight that we seldom got forced anywhere.
And with union seniority, if anyone was forced, it'd be the junior man. It was called paying your dues. You were only the bottom until they hired one more driver.
 

HighwayRover

Seasoned Expediter
I have worked in several industries that thrive on "independent contractors". Many companies cross the line on a regular basis.
By my understanding, the new policy added by FedEx that considers load acceptance ratings when dispatching a load boldly crosses that line. By punishing a contractor for running his business as he sees fit, he is now being forced to take unprofitable loads in order to be considered for others. This may as well be forced dispatch. From what I have seen in the past, this policy would not pass the test by an employment commission. I was surprised to see such a policy could get past the FedEx attorneys.
 

davekc

Senior Moderator
Staff member
Fleet Owner
I have worked in several industries that thrive on "independent contractors". Many companies cross the line on a regular basis.
By my understanding, the new policy added by FedEx that considers load acceptance ratings when dispatching a load boldly crosses that line. By punishing a contractor for running his business as he sees fit, he is now being forced to take unprofitable loads in order to be considered for others. This may as well be forced dispatch. From what I have seen in the past, this policy would not pass the test by an employment commission. I was surprised to see such a policy could get past the FedEx attorneys.

It isn't forced if you can turn a load down. As an outsider looking in, I would say it is more about their profit than yours. Another one of those...."follow the money". They not so long ago became a player on Sylectus as an avenue to dump loads that they couldn't cover.
The problem is, many on Sylectus won't run as cheap as some of the Fed loads that they want to cover. For example, it is hard to get others to cover straight loads for under a buck a mile.
Next best answer apparently is to push your own drivers in to taking them.
I would be surprised if they even asked their legal department.
 

runrunner

Veteran Expediter
Runrunner,you are 100% correct. Under the AAG deal we were only allowed one truck, owner driven.
Multi truck owners are problematic.
We wanted a level playing field before having a level playing field was cool.

Just a guess on my part,you were employee's earning wages, and being reimbursed for the use of your equipment. Same as an employee who gets mileage for using there own car for work.
 

zorry

Veteran Expediter
Just a guess on my part,you were employee's earning wages, and being reimbursed for the use of your equipment. Same as an employee who gets mileage for using there own car for work.

Good guess. Except all the loads did not pay the same. Some paid good. Others paid better. Occasionally, awesome.
 

Turtle

Administrator
Staff member
Retired Expediter
It isn't forced if you can turn a load down.
Exactly. Just because there are consequences to turning down a load doesn't mean that it's forced dispatch or has somehow crossed a line. Rate acceptance simply makes you responsible for your actions. Carriers will tend to use contractors who are reliable and they can count on. Those contractors who turn down lots of loads simply won't be offered as many loads. It's not like the lease contract obligates the contractor to accept loads, any more than it obligates the carrier to offer those loads.
 

HighwayRover

Seasoned Expediter
Call it what ever you;d like but when a contractor cannot direct his own business without pressure or forces from the company, he is not independent. True, he may be a contractor but it's his independence that sets him apart from employee status. I have dealt with employment commissions and judges in similar matters. It's their perception that matters. This situation is over the line and into the grey. If I were FX I wouldn't want to give this administration a shot at unionizing FedEx.
I would only take one case to open the door.

It should be noted that there are far more considerations that just one (being able to turn down a load) when determining who is an independent contractor and who is not. Anyone who accepts the one-issue definition is doomed into accepting whatever is tossed at them.
 
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runrunner

Veteran Expediter
Exactly. Just because there are consequences to turning down a load doesn't mean that it's forced dispatch or has somehow crossed a line. Rate acceptance simply makes you responsible for your actions. Carriers will tend to use contractors who are reliable and they can count on. Those contractors who turn down lots of loads simply won't be offered as many loads. It's not like the lease contract obligates the contractor to accept loads, any more than it obligates the carrier to offer those loads.

Just because you turn down a load doesn't make you unreliable. The Fed is a high volume business, from the time they took over Roberts,they have tried to bully the contractor into submission. For instance, I was a co-driver on a WG truck with the owner and after he turned down a low paying load offer two times,dispatch called his phone and ask to speak to me, and said to me in a very mean tone of voice "do you have FedEx on the side of that truck",and then tried to convince me to accept the load, I told her if I accept the load how am I gonna do it without a truck,the owner already said no twice. The whole point in hiring Independent's in trucking is to escape paying for trucks,and the cost of hiring drivers,the trade off for that is you might lose some loads, if you have no trucks around or any willing to do the run. When someone contract's anyone to do anything they don't get to set the price, the contractor sets the price.I respect your opinion, I just believe an Independent should be allowed to remain Independent, a company's greed should not dictate how you are treated or how much work you get. I think FedEx uses the wrong approach when trying to cover short or lower paying runs. Rewarding someone for doing something is more productive than punishing someone for not doing something. Like the less than 75 status for instance,but you can't cheapen the reward buy not standing by it,like they have done.
 

Turtle

Administrator
Staff member
Retired Expediter
Call it what ever you;d like but when a contractor cannot direct his own business without pressure or forces from the company, he is not independent. True, he may be a contractor but it's his independence that sets him apart from employee status.
Without realizing it, you helped make my point. Without pressure or forces from who? The company? What company? If you are independent, as you view it, then there is no company from which pressure or forces can be exerted. You are confusing "independent contractor" status with that of "total autonomy." You gave up total autonomy when you leased the truck to FedEx.

When you signed the lease contract with FedEx, you gave FedEx Custom Critical "exclusive possession, control, and use of the equipment" for the duration of the lease. A reading of the lease will confirm as much. The reason you will find it in the lease is because it is required to be in there.

I have dealt with employment commissions and judges in similar matters. It's their perception that matters. This situation is over the line and into the grey.
The US Code of Federal Regulations (49 CFR 376.12) shows that it ain't all that gray. "(4) Nothing in the provisions required by paragraph (c)(1) of this section (the part about exclusive possession, control) is intended to affect whether the lessor or driver provided by the lessor is an independent contractor or an employee of the authorized carrier lessee. An independent contractor relationship may exist when a carrier lessee complies with 49 U.S.C. 14102 and attendant administrative requirements."

Panther, as well as other carriers, have had acceptance rates as a factor for independent contractors for years. It has been questioned, tried and tested many times, and every time the objections have failed. You don't lose independent contractor status until one of several things occur, most often being behavioral control where the carrier tells the contractor how to perform and accomplish the job, be it what route to take or how to secure the freight In expediting. What crosses the line in tippy toe fashion the most is when carriers pay a flat rate per mile and thus severely limits the contractor's ability to realize a profit or a loss. Just ask Panther about that. It's a fine line.

It should be noted that there are far more considerations that just one (being able to turn down a load) when determining who is an independent contractor and who is not.
So much for the "boldly crosses that line" argument.

Anyone who accepts the one-issue definition is doomed into accepting whatever is tossed at them.
That much is certain. Better to read the relevant Code of US Federal Regulations, and your lease, to be better informed about all of the issues.
 

Turtle

Administrator
Staff member
Retired Expediter
Just because you turn down a load doesn't make you unreliable.
No, it doesn't. But a historical track record of turning them down might.

The Fed is a high volume business, from the time they took over Roberts,they have tried to bully the contractor into submission.
That's because the Fed is the personification of pure evil and it isn't surprising that that evil began to manifest itself with former Roberts contractors.

When someone contract's anyone to do anything they don't get to set the price, the contractor sets the price.
Well, the market and competition sets the price. The contractor can accept or refuse the job based on price, though, but the contractor cannot demand a certain price and expect to get it just because they demanded it.

I respect your opinion, I just believe an Independent should be allowed to remain Independent, a company's greed should not dictate how you are treated or how much work you get.
The only way to remain truly independent is to not sign a contract lease with a carrier. By signing a lease you are giving up some of your autonomy, though not necessarily your independent contractor status.

I think FedEx uses the wrong approach when trying to cover short or lower paying runs. Rewarding someone for doing something is more productive than punishing someone for not doing something. Like the less than 75 status for instance,but you can't cheapen the reward buy not standing by it,like they have done.
On that one I agree completely. The Fed knows to how pressure and bully, and that's their go-to tactic for getting their way. Not being with FedEx I don't know the details, but from comments I've read and from those I have talked to, it appears that FECC is implementing the acceptance rate in gross stumbling (and pressure and bully) fashion. Granted, the customer is looking to move freight from A-to-B and could care less how much deadhead the truck has to get there, but FECC should be mindful of turndowns which incur excessive deadhead.

A recently posted example: 198 mi DH, 97 mi LD, 295 mi TL, $160.30. (54 cts PM).

Well, it's $.54 per mile from the driver's perspective, but the load is 97 miles and it pays $160.30. That's $1.65 per mile, a decent load. That's what the customer cares about, and it is apparently what FECC cares about. Even Panther doesn't hit you with a refusal if the deadhead is more than 40% of the line haul. But it appears that FECC will. But it's a load that never should have been offered to a truck 200 miles away. It should have been offered to a truck sitting much closer, or FECC never should have accepted the load. If they want to get it covered they'll either have to pony up enough money to do so, or broker it out to a closer truck. But to hit a truck 200 miles away with a refusal is patently unfair. It certainly illuminates the arrogance of FedEx if that's indeed the case.

They will have to create parameters within which they and the contractors can equitably operate. Parameters like deadhead percent of line haul, less than 100 miles, dispatched more than 8 hours in advance, etc. Otherwise they could offer a Baltimore, MD to Reston, VA load to a truck sitting in Wyoming solely for the purpose of giving a retaliatory refusal. The reason for factoring in the acceptance rate is to track who is and is not reliable to FECC, and to weed out the cherry pickers. The load offers have to be reasonable, however, otherwise the acceptance rate is meaningless. But I'm not sure they even want to be reasonable. Their history doesn't exactly indicate that's what they are after.

The use of acceptance isn't in and of itself a problem, nor does it cross any line. But if they implement it as a bludgeoning tool for coercion with no parameters, that's a problem. At the very least someone there needs to make a call to Panther to find out what parameters they have in place for acceptance rates, rather than trying to forge anew the wheel with their own dominant will.
 

Moot

Veteran Expediter
Owner/Operator
At the very least someone there needs to make a call to Panther to find out what parameters they have in place for acceptance rates, rather than trying to forge anew the wheel with their own dominant will.

Panther now has two methods to calculate acceptance rates. One is based on a sliding 60 days so your acceptance/refusals are always based on 60 days. Drivers can easily check their acceptance percentage by logging on to the Drivers Webpage. This change came about with the new website.

The other method is the old method that you are familiar with. It is based on the previous month and all days in the current month. Today is October 7th. My acceptance rating is based on all loads accepted/refused during the 30 days in September and 6 days in October. The only way to access one's rating under this method is to call Driver Relations.

Today my acceptance rate on the Drivers Webpage is 89%. A call to Driver Relations gets me an 85%. Only at Panther!
 

davekc

Senior Moderator
Staff member
Fleet Owner
Panther now has two methods to calculate acceptance rates. One is based on a sliding 60 days so your acceptance/refusals are always based on 60 days. Drivers can easily check their acceptance percentage by logging on to the Drivers Webpage. This change came about with the new website.

The other method is the old method that you are familiar with. It is based on the previous month and all days in the current month. Today is October 7th. My acceptance rating is based on all loads accepted/refused during the 30 days in September and 6 days in October. The only way to access one's rating under this method is to call Driver Relations.

Today my acceptance rate on the Drivers Webpage is 89%. A call to Driver Relations gets me an 85%. Only at Panther!

Mine is more balanced. I show "0" for both.:cool:
 

rollincoal

Veteran Expediter
Owner/Operator
They will have to create parameters within which they and the contractors can equitably operate. Parameters like deadhead percent of line haul, less than 100 miles, dispatched more than 8 hours in advance, etc. Otherwise they could offer a Baltimore, MD to Reston, VA load to a truck sitting in Wyoming solely for the purpose of giving a retaliatory refusal. The reason for factoring in the acceptance rate is to track who is and is not reliable to FECC, and to weed out the cherry pickers. The load offers have to be reasonable, however, otherwise the acceptance rate is meaningless. But I'm not sure they even want to be reasonable. Their history doesn't exactly indicate that's what they are after.

Define reasonable? Yours, mine, customers', company managers/dispatchers', company executives' - who's reasonable here?
 
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Turtle

Administrator
Staff member
Retired Expediter
Define reasonable?
Uhm, agreeable to reason or sound judgement, logical, not excessive.

Yours, mine, customers', company managers/dispatchers', company executives' - who's reasonable here?
Reasonable to the one accepting the load offer. Excessive deadhead where you lose money, even though the rate is perfectly reasonable to the customer who wants their freight moved from A-to-B, and reasonable to the carrier, dispatchers and everyone else, is an unreasonable load offer, particularly if you get hit with a refusal over it.

Why do I get the feeling that the term cherry picker perked up your ears? Otherwise there'd be no need to ask for a definition of "reasonable" nor wonder aloud about who's reason I was talking about, since the context of my paragraph should have made that perfectly clear.
 
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