The trucking industry has had a long tradition of contracting with owner operators, who lease a truck and a driver, to an authorized carrier under the leasing regulations, 49 C.F.R. 376. For over 60 years the industry has treated owner operators as independent contractors, not employees. Political forces are at work to change the status quo ante. The Obama administration and many state agencies are making serious efforts to reclassify independent contractors as “employees.” The President and his labor backed colleagues introduced a bill when he was a senator that would make it easier to reclassify independent contractors.

The bill didn’t stop at having the employer pay back taxes, premiums and benefits…it would have imposed severe penalties for “misclassification and required companies to post notices of a contractor’s rights to challenge his classification. Fortunately, it did not pass before the other party took the house. But the issue is still alive. As with other anti-business initiatives, the President continues to attempt to accomplish through regulation and regulatory enforcement, what he couldn’t get passed in Congress. State agencies are following suit.

Why? As in all things political, the motives can usually be traced to money which is in short supply in government. Many politicians believe they can raise more tax money, cover more people with health insurance, collect more unemployment premiums and help their union contributors by reclassifying more independent contractors as “employees.” Employers withhold and match payroll taxes, provide benefits, pay unemployment insurance and worker’s compensation insurance. Independent contractors are responsible for their own benefits, taxes and injuries on the job. Employees have a right to engage in union activity. Independent Contractors do not. I think you get the picture.

How much money would it cost you if you woke up one day to find that all of your owner operators were deemed to be “employees” and were handed a large bill for back taxes, premiums and penalties? What would your contractors say if interviewed confidentially by an IRS agent? How would you suddenly change all your contracts and lease programs? How quickly can you change your business model from owner operator to company employee drivers? Can your rates support such a fast change? A reclassification could very well threaten the viability of your business. Getting this right is vitally important.

Ask your lawyer if your owner operators are subject to a misclassification challenge. You will not get a straight answer, but a very long one. This is because this issue is not black and white, but many shades of gray. What a shock it would be to find you have a large uninsured liability, applied retroactively, due to a gray legal issue that is determined by the courts! If you have owner operators, investing in some legal advice is a critical cost of the business. There are some 20 factors that go into the case by case test, but the prominent one is the “right to control” the details of the work.

In this context, listen to the conversations between your office staff and owner operators. Ask your owner operators if they realize that they are “self-employed” and make their own business decisions. If you are disappointed in the answers, you have a problem.

Does your staff talk to owner operators as “adults” or “parents?” Do they respond as self-employed entrepreneurs or “children?” Telling someone what to do is the lazy solution to a problem and often leads to additional issues. The parent/child conversation is manipulative and you shouldn’t be surprised that the recipients respond as children. Manipulation in reverse is the result. We have all seen an adult have a child tantrum as he verbally “stomps his feet.” “You’re not giving me enough miles!” “I can’t make any money here!” “The others get better loads than I do!” In a parent/child conversation, the parent takes responsibility for everything that happens and tells the child what to do. The contractor is then placed in the position of a child, dependent on the company for happiness, security and needs. In such a conversation the contractor really has no responsibility, because he has no control. He might even like putting all responsibility for lack of miles or profit on the company. This manifests itself in the negative conversations at the truck stop which damages recruiting. You caused him to have no ownership in his success or failure. Such conversations are not only contagious, but threaten your classification of the owner operator as an independent contractor.

The challenge is to create a culture where all in the company engage in adult-adult conversations with owner operators. An adult conversation is characterized by the notion that as businessmen, both the company and the owner operator are equal. It recognizes that each has the ability to think. And most importantly, it knows that each side has the ability to make their own business decisions. . “Responsibility” is a heavy load. Being self-employed is not easy. Freedom to make business decisions has consequences. Implicit are the possibility of reward and the risk of failure. Is your office staff familiar with the owner operator contract? In an adult conversation, most conflicts can be resolved by referring to the contract. It is permissible to give good advice, but that advice should always be phrased as “If you decide to do this, I think it is likely this will happen. If you decide to do that, probably this will happen. What do you want to do?”

As the leader of your business, only you can become the eyes and ears of the company. Transforming your culture requires constant monitoring and vigilance.

“You only have to do a very few things right in your life so long as you don't do too many things wrong.”
Warren Buffett