Key Takeaways

  • A driver contract outlines the terms between a business and an independent driver, detailing responsibilities, pay, and compliance.
  • Owner drivers operate as independent contractors and must manage taxes, vehicle maintenance, and regulatory compliance.
  • Key provisions in contracts may include compensation models, use of equipment, safety obligations, and termination clauses.
  • Legal compliance with Department of Transportation (DOT) and Federal Motor Carrier Safety Administration (FMCSA) rules is critical.
  • Understanding IRS classification rules and Department of Labor guidelines is crucial to avoid misclassification.
  • Contracts should clearly define whether the driver is providing services with their own vehicle or a company-provided one.
  • Consulting a legal professional ensures your driver contract complies with federal and state labor laws.

Owner Driver Contracts

Owner driver contracts are agreements made between truck drivers and businesses, or truck drivers and individuals who contract their services, in which the driver agrees to transport materials for the contracting party in exchange for compensation. With these agreements, truck drivers act as independent contractors for the contracting party and as such are subject to the typical employer-contractor relationship.

Some of the provisions that one may encounter in a typical owner-driver contract include:

  • That the driver understands that they are an independent contractor.
  • That the driver may perform additional duties and be presented with a new contract if such is the case.
  • That pay will be a percentage of Net Load Pay.
  • That compensation will not be made for deadhead miles.
  • That compensation of personal expenses is not the contracting party’s responsibility.
  • That work and revenue are not guaranteed, that an average or specific amount of pay is not guaranteed, and that pay is based off individual jobs only.
  • That the contractor retains control over what jobs are accepted and what hours are worked.
  • That the contractor agrees to uphold and follow the regulations of the Federal Motor Carrier Safety Administration and the Department of Transportation.
  • That the contracting party has zero tolerance for the hauling of contraband or for illegal activities while hauling for the company and that any penalties related to this will be the responsibility of the contractor.
  • That deviating from the agreed upon hauling route with the hauling vehicle or operating the hauling vehicle for personal purposes requires verbal disclosure to the contracting party.
  • That the hauling vehicle must be serviced every 10,000 miles, with receipts provided.
  • That the company can request a viewing of the hauling vehicle at any time.
  • That any assigned hauling vehicle must be returned to the contracting party, with failure to do so being deemed abandonment.
  • That it is the contractor’s responsibility to document trips through Vehicle Trip Reports, Vehicle Expense Reports, Bills of Lading, and receipts.

There may be many other provisions involved in an owner-driver contract, depending on the nature of the contracted work.

Key Provisions in a Driver Contract

A comprehensive driver contract should outline essential business and legal expectations for both the driver and the contracting party. The following elements are commonly included in professionally drafted agreements:

  • Scope of Work: Details on delivery duties, geographic zones, load types, and schedule expectations.
  • Compensation Terms: Base pay, bonuses, and whether payment is per mile, per load, or per hour. Clarifies whether deadhead miles are compensated.
  • Use of Equipment: Specifies whether the driver is using a company-provided vehicle or their own. If the latter, it should detail insurance and maintenance responsibilities.
  • Insurance Requirements: Specifies the types of insurance required (e.g., liability, cargo, physical damage) and who is responsible for carrying them.
  • Compliance Obligations: Requires adherence to FMCSA and DOT regulations, including drug testing, logbooks, and driving hours.
  • Termination Clause: Defines the conditions under which the agreement can be ended by either party.
  • Non-Solicitation or Non-Compete: In some cases, contracts may restrict drivers from working with competitors for a period.

Properly structured driver contracts help avoid legal disputes and ensure all parties are on the same page regarding expectations.

Owner Drivers

Owner drivers are truck drivers who do not drive for a specific company as an employee but rather operate as independent contractors, and as such are both their own boss and business owner. With such an arrangement, they can pick and choose what work they do and when they do it. The freedom that comes with this can have great appeal; however, with this freedom comes certain responsibilities, such as:

  • Recording expenses. Owner drivers must keep detailed records of their expenses and receipts.
  • Keeping accounts. Owner drivers must keep their accounts up to date and in order.
  • Making invoices. Owner drivers must create invoices and be sure to record payment details and terms.
  • Chasing payments. Owner drivers must be aware of when payments will be due, and they may have to chase overdue payments.
  • Providing customer service. Owner drivers will have to deal with suppliers and customers, and the better service provided the better the odds of receiving more work.

As an owner driver, you may want to consider creating a limited liability company (LLC) to house your driving business, since there are some companies that prefer to work with LLCs rather than independent contractors.

Legal Classification and Compliance

Owner drivers are generally classified as independent contractors, but misclassification can have legal and financial consequences. The Department of Labor (DOL) recently updated its rules for determining whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FLSA). Key factors considered include:

  • Degree of control exercised by the hiring party over the work.
  • Opportunity for profit or loss depending on managerial skill.
  • Investment by the worker in equipment or materials.
  • Permanency of the relationship.
  • Skill and initiative required in the work performed.

Owner drivers who lease equipment or operate under a carrier’s authority may fall into gray areas. It is essential to ensure the contract accurately reflects the nature of the business relationship and complies with the DOL’s independent contractor standards​.

Duties of an Owner Driver

Some other duties of owner drivers include:

  • Adhering to all traffic laws while transporting cargo over long distances.
  • Planning routes, helping unload and load cargo, logging one's trucking activities, and interacting with dispatchers.
  • Maintaining one's equipment and vehicle to make sure it is road-ready.
  • Performing business activities like establishing a solid workflow and submitting one's taxes properly and on time.

Vehicle and Insurance Responsibilities

A well-drafted driver contract should clearly establish which party owns and maintains the vehicle used in transport. If the driver uses their own vehicle, the contract should specify that the driver is responsible for:

  • Routine maintenance and repairs.
  • Keeping the vehicle road-legal per FMCSA and DOT standards.
  • Carrying appropriate insurance coverage, such as:
    • Primary auto liability
    • Cargo insurance
    • Physical damage insurance
    • Non-trucking liability (if applicable)

If the contracting company provides the vehicle, the agreement should spell out conditions for its use, including any mileage limits, fueling policies, and return procedures.

Five Ways to Succeed as an Owner Driver

It is easy to fail as an owner driver if you plunge into it without a plan. The following tips will help you avoid that fate:

  1. Understand that you will only be paid for the work you do; if you are not self-motivated to pursue work, then being an owner driver may not be for you.
  2. Be into building long-term work relationships. Changing carriers repeatedly and after short periods of time is not a good long-term strategy for establishing a solid workflow or a good reputation.
  3. Be aware of the economy of the business sector you are thinking of hauling for. Sectors that are in economic downturns will have less work, and so should be avoided, if possible.
  4. Be realistic about revenue and keep a budget for slow times. With the freedom of being an owner driver also comes the uncertainty of not having a regular paycheck. Be aware of your costs and live inside your means.
  5. Do not forget that trucking is a business. The freedom of the open road may have great appeal, but at the end of day, work needs to be done, and people are counting on you to do it.

Common Mistakes in Driver Contracts

Avoiding common contract pitfalls is essential for both owner drivers and businesses. Frequent mistakes include:

  • Vague Payment Terms: Failing to specify how and when the driver will be paid can lead to disputes.
  • Lack of Termination Language: Omitting how the contract can be ended may complicate separation.
  • No Dispute Resolution Clause: Without it, minor conflicts may escalate to costly legal battles.
  • Failure to Define Work Status: Leaving ambiguity around whether the driver is a contractor or employee increases legal risk.
  • Missing Safety and Compliance Terms: Contracts should reference FMCSA and DOT rules to ensure regulatory alignment.

Avoiding these mistakes not only strengthens your driver contract but also helps prevent liability and legal challenges down the line​.

Frequently Asked Questions

1. What is the purpose of a driver contract? A driver contract defines the working relationship, outlining pay, duties, compliance requirements, and termination terms between the driver and the business.

2. Do owner drivers need their own insurance? Yes, owner drivers typically must carry their own liability and cargo insurance if using their own vehicle, unless otherwise stated in the contract.

3. Can a driver contract specify a non-compete clause? Yes, some contracts include non-compete or non-solicitation clauses, but these must be reasonable and enforceable under state law.

4. How do I know if I’m misclassified as an independent contractor? Review the level of control your contracting company has over your work and consult an employment attorney to assess your status under DOL guidelines.

5. Should I use a template or hire an attorney to draft a driver contract? While templates are a starting point, consulting a transportation attorney helps ensure the contract complies with current laws and protects your interests. You can find one through UpCounsel’s network of vetted professionals.

If you need further help understanding owner-driver contracts, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.