1/27/2014
Independent Contractors and
Owner Operators
Their Success Is Your Success
Todd Walthall
Recruiting Manager
Our Program
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Various programs to get them on the road
Independent contractor (Use their authority)
Owner operator (Use our authority)
Lease (IC or OO option)
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1/27/2014
Contracts
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Independent Contractor Percentage
Independent Contractor Mileage
Owner Operator Percentage
Owner Operator Mileage
Lease Independent Contractor Percentage
Lease Independent Contractor Mileage
Lease Owner Operator Percentage
Lease Owner Operator Mileage
What We Offer
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Profit Sharing Program
Fuel Rebate Program
Free In-House Dispatch Software
Weekly Direct-Deposit Settlements
Discount Insurance Program
Fuel Advance
Online Settlement Access
No Force Dispatch
Cargo Insurance
24 hour Roadside Trailer Maintenance
How Do We Keep Them?
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Contractor Reviews
Tax and Business Consultations
Company Store with Rewards Program
Family Recognition Program
Extended Orientation with TOTAL Transparency
Utilization of our business partners and….
HOLDING THEIR HAND AND HELPING THEM
SUCCEED
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1/27/2014
But What is The Core of Our Retention?
• Understanding these simple principles…….
– They are running a BUSINESS
– They do not sign on to “help” us out
– They have a personal life outside of the truck
Think about this for a few minutes…
Where Were You This Weekend?
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With family
With friends
With your significant other
At a ballgame
Just relaxing at home
Where Were They?
• Fighting traffic
• Away from home
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Where Do You Sleep?
Where Do They Sleep?
WHAT DID YOU EAT?
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What Did You Eat?
What Did You Deal With This Weekend?
• What to do
• Where to go
What Did They Deal With This Weekend?
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Weather
Bad drivers
Cranky dock workers
Home issues
Routes
Delivery/Pick up times
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1/27/2014
In Conclusion………
Options, incentives and rewards will get them in, but to keep
them you have to remember…….
THEY ARE IN BUSINESS TO MAKE
THEIR LIVES AND THEIR FAMILIES
LIVES BETTER
A very simple phrase that when remembered and implemented
by every person in your organization will help your retention
numbers.
Greg Finzen
Director of Recruiting
Hirschbach Motor Lines, Inc.
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1/27/2014
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East Dubuque, Illinois
Established 1935
535 power units
380 independent
contractors–most are lease purchase
• 155 company OTR & dedicated drivers
• Run primarily east of the Rocky Mountains
• Refrigerated freight
In-House Lease Purchase
Program
• Drivers contracted under
our authority
• Only L/P or O/O contracted
• No money down, no credit
check
• 2012, 2013, 2014 tractors
• 24 to 48 months leases
• Balloon payment or walk
away
Program Designed for Long Term Success
• Full service maintenance plan–
not maintenance escrow covers
all mechanical parts & repairs
• Free road hazard warranty
• Breakdown, layover and stop off
pay
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1/27/2014
Program Designed for Long Term Success
(cont.)
• Latest fuel efficient trucks and trailers
• APUs, refrigerators,
upgraded seats and
interiors
• Paid tolls with toll
transponders
• Paid reefer fuel
• No forced dispatch
• Access to quality
major medical insurance
Retention Starts with Recruiting
• Conversational recruiting technique focuses
on driver’s needs instead of rote recitation of
program
• Provide applicants with real information
• Qualify applicants quickly and thoroughly
• Pre-contract questionnaire helps ensure we
understand applicant’s expectation and they
understand ours
• Questionnaire follows driver though
orientation and to their driver manager
Orientation
• Developed strategic plan in May
2012
• Focused on how all
departments impacted turnover
• Changed first impressions
• Improved orientation creature
comforts with new chairs, tables,
and pleasing décor
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1/27/2014
Orientation
Weekly Management Meeting
with Orientation Drivers
May 2013
• Trucks ready for seating
and available for viewing
just outside classroom
• Management team
meeting with orientation
class
• Two orientation classes a
week instead of just one
– 2.5 days each
Keeping Them Once You’ve Got Them
Pod Concept
Close DM
Supervisor/Driver
relationship
Smaller DM
Supervisor
Boards
2 to 6 Week
Focus
Incentivize Zero
Terms
Innovative
Monitoring
Innovative Monitoring
Weekly Orientation Class Turnover Report
• Green = Turnover < 20%
• Red = Turnover > 20%
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1/27/2014
Always Striving to Improve
• Open door policy–can talk to anyone in the
company and we mean it
• Always trying to improve driver miles
• Weekly executive team meetings focused on
turnover
• Driver surveys and scorecards–our drivers
score us and we measure how we did
Mark E. Hunt, Esq.
Partner
King and Ballow
Overview
• Natural tension exists between retaining contract
drivers and maintaining independent contractor
status
• Need to pay attention to independent contractor
issue, especially in current enforcement environment
• At the federal and state level, enforcement activities
have increased over the last few years
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1/27/2014
Federal Initiatives
• Payroll Fraud Prevention Act of 2013
• Company must give notice to both employees and
non-employees (independent contractors):
− Whether business has classified worker “as an
employee or non-employee,”
− Directs worker to U.S. Department of Labor
(“DOL”) Website for information about rights of
employees under the law, and
− Informs worker to contact DOL if they believe
they have been misclassified as a nonemployee.
Federal Initiatives (cont.)
• Penalties
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First offense- $1,100
Second or willful offense- up to $5,000
Federal Initiatives (cont.)
• DOL Misclassification Initiative
– Memorandum of Understanding (“MOU”) between
DOL and IRS- September 2011
– Agencies working together and sharing
information to reduce incidences of
misclassification of workers
– DOL also entering into MOUs with state labor law
enforcement agencies. MOUs provide that
agencies will assist each other with enforcement
of applicable laws and that they will make
referrals of potential violations of each other’s
respective laws
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1/27/2014
Federal Initiatives (cont.)
• As of early December- 16 states have joined the DOL’s
Misclassification Initiative
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California
Colorado
Connecticut
Delaware
Hawaii
Illinois
Iowa
Louisiana
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Maryland
Massachusetts
Minnesota
Missouri
Montana
New York
Utah
Washington
• $10 Million has been allocated for bonuses from DOL to states for
boosting enforcement of existing worker classification rules at
state level
State Initiatives
• Since mid 2000’s a substantial number of states
have passed laws which:
– Limit use of independent contractors;
– Increase penalties for misclassification;
– Create misclassification taskforces; and/or
– Require state agencies to share information
among themselves regarding companies that
misclassify workers
• States have engaged in an aggressive enforcement
of state unemployment insurance laws
State Initiatives (cont.)
• Specific coverage for certain categories of
workers:
– Example−New Jersey Truck Operator
Independent Contractor Act−would have created
a presumption that port truckers and parcel
delivery truckers are employees
• Governor Chris Christie vetoed bill earlier this year
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1/27/2014
Maintaining Independent Contractor (“IC”)
Status
• Generally easier to prove independent contractor status
with contract drivers who own equipment and operate
under own authority
• With owner operators (“O/O”) under lease/purchase
arrangements−generally more difficult to establish
independent contractor status
– Applicability of Federal Truth-in-Leasing Regulations
(49 CFR 376) (“Regulations”)
– Mandates certain controls over owner operator’s
– Compliance with Regulations does not affect possible
independent contractor status of owner operator’s
Maintaining Independent Contractor
Status (cont.)
• Favorable factors:
– Written agreement establishing independent contractor
relationship
– Contract driver/owner operator may reject loads−No forced
dispatch
– Contract driver/owner operator may provide services for other
companies−Regulations may limit this with owner operator
under lease/purchase arrangements
– Contract driver/owner operator is not paid based on time taken
to perform services but based on job performed
– Contract driver/owner operator provides and/or pays for tools
and equipment used to perform services
Maintaining Independent Contractor
Status (cont.)
− Contract driver/owner operator is responsible for
cost of repair and maintenance of equipment
− Contract driver/owner operator pays expenses
associated with performance of services
− Contract driver/owner operator chooses days on
which services will be performed
− Contract driver/owner operator pays own taxes and
receives IRS form 1099 and not a W-2
− Contract driver/owner operator does not receive the
benefits the company provides to its employees
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1/27/2014
Maintaining Independent Contractor
Status (cont.)
− Contract driver/owner operator relationship with
company is not terminable “at-will”–there are
limitations on company’s ability to terminate
independent contractor relationship
− Contract driver/owner operator free to accept or
decline loads without penalty
− Contract driver/owner operator free to choose route to
take to destination
− Contract driver/owner operator free to use
helpers/employees in performance of services
Maintaining Independent Contractor
Status (cont.)
– Contract driver/owner operator is not required to punch
a time clock
– Contract driver/owner operator is not required to abide
by rules in an employee handbook or face discipline
– Contract driver/owner operator is not required to wear a
company uniform or identification badge
– Contract driver/owner operator is not required to contact
company frequently during the performance of services
Q&A
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Addendum
Full-sized Charts and Graphs
Keeping Them Once You’ve Got Them
Pod Concept
Close DM
Supervisor/Driver
relationship
Smaller DM
Supervisor
Boards
Incentivize Zero
Terms
2 to 6 Week
Focus
Innovative
Monitoring