Separate from the importance of a legitimate business purpose when it comes to classifying individuals as independent contractors, employers should know that state and federal laws and regulations impose strict requirements on how independent contractor relationships can and should be structured. If you’re in the transport and logistics trade (or have customers who are), or have any need to hire truck drivers as independent contractors, then understanding federally-mandated laws, state and local regulations, and the practicalities of these agreements is crucial to your business success. Such agreements are particularly important if you intend to scale up your company and expand internationally.

But just like any other business strategy, entrepreneurs need to bear in mind that since these agreements can literally run the risk of such an expansion not being available to them, they should be hidden away from view. Instead, they should be viewed as valuable components of the company’s growth strategy.

Truck Driver Independent Contractors Agreements have gained recent momentum in the face of a possible government rule released under Obama that may soon impose stricter requirements on truck driver employment and contractor relationships. Companies that have exploited these relationships will need to pivot fast by analyzing all of their current relationships with truck drivers now to understand whether or not they likely qualify for contract worker status (and if they don’t, look for ways to move certain drivers to an employment status). Trucking and logistics companies that are small to medium-sized in size (as non-classified by the SBA and the applicable code of federal regulations) should be particularly concerned about the future of their businesses and how they will be able to survive in a post-Obama, post-PPA world.

Truck Driver Independent Contractor Agreements can help entrepreneurs achieve:

• Compliance with local and federal labor laws (which can also help you avoid fines for employee misclassification and misappropriation of business resources – namely, workers’ compensation insurance premiums);
• The ability to access international markets (many countries require businesses to use independent contractors in their supply chains);
• Ability to attract and maintain top talent (including because contractors tend to be less-taxed, treated with more autonomy by employers, and can be thought of as “consultants” instead of “employees”); and
• Scalability and flexibility (by using 3PLs and 4PLs to fill transport needs when fluctuations in demand occur).

This is just a sampling of the potential benefits of using 2PLs and 3PLs for transport needs and the benefit of having truck driver independent contractor agreements at the ready for when those needs arise. There are also certain potential downsides and costs that could come into play that you would need to bear in mind before drafting any such agreement, including:

• More frequent transportation needs (and thus, more payments to all drivers, including those contractors who may only be able to make themselves available if they are paid to do so);
• No guarantee of availability of all transportation services needed (i.e., a lack of ability to use one contractor only, instead of seeking out new contractors for every single trip needed or unexpectedly creating a more complex, demanding, pre-existing, external relationship with a contractor who must manage other contractors within the business); and
• The loss of time that may be required to ‘hire[, sub-hire,] and fire’ drivers through interim agreements on an ongoing, repeating basis.

To read more about truck driver independent contractor agreements and how they can benefit the scalability and positioning of your business for being able to enter into international markets, see: this resource.