On July 4th we celebrated our nation’s freedom from foreign tyranny. The personal freedoms that day embodies are revered in the trucking industry, particularly among owner-operators.
Yet various groups seek to chip away at your independence. Many state governments, drooling at the vision of more taxes rolling in, would love to reclassify independent contractors as employees. And in at least one case, the courts have played along. Late last year, a California court found FedEx Ground owner-operators actually were employees. FedEx continues to fight similar challenges around the nation.
Catching the whiff of increased taxes, the federal government has jumped in, too. Two bills before Congress – one introduced by Sen. Barack Obama, the presumptive Democratic presidential candidate – would enable the Internal Revenue Service to gradually reclassify independent contractors as employees.
Not to be left out are the labor unions, which are eager to bring owner-operators – and their union dues – into the fold. No surprise that union leaders applauded the recently approved Clean Truck Program at the Los Angeles port, which forces carriers to run their own equipment and use employee drivers by 2013. Under the auspices of cleaner air, the program virtually eliminates the use of owner-operators, who have historically been the primary source of freight movements at the port.
Environmental issues aside, most groups assaulting independent contractor status claim they want to protect workers from abuses by companies who take advantage of their hard work without paying their fair share in taxes. There are no doubt shady companies in many industries, including trucking, that structure their workforce for tax advantages.
But in trucking, the leasing of independent contractors is a long-accepted business practice – one that is beneficial to the company and the owner-operator. Hardly victims, you are entrepreneurs who have chosen a business model that lets you succeed or fail based on your smarts and old-fashioned hard work.
So what does all of this mean to you? You have little in common with most FedEx independent contractors, whose work lives are highly regimented. Nor do you resemble port haulers who are paid by the load. But these examples set precedents that can be used to frame legislation at the state and federal level that could stifle your independence.
Beyond FedEx, the Los Angeles port and some state interpretations, little headway has been made in reclassifying owner-operators. In November, the IRS withdrew an attempt to reclassify owner-operators at a Virginia fleet as employees. The IRS had argued unsuccessfully that payment per mile indicated the carrier’s control of owner-operators’ routes.
The fallacy of that argument shows why we must educate our elected officials on the importance of the independent business model to our industry. Let your congressmen and senators know that no one coerced you into being an independent contractor. You chose it because you knew it was your best chance to build a successful business.
And because you treasure your independence.