Owner Driver Contracts: Everything You Need to Know
Owner driver contracts are agreements in which the driver agrees to transport materials for the contracting party in exchange for compensation.4 min read
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.
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.
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.
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:
- 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.
- 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.
- 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.
- 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.
- 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.
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