As a trucking company owner or manager, one of the key decisions you will have to make is whether to hire owner operators or company drivers. Both options have their pros and cons, and the decision you make will depend on a number of factors, including your budget, the type of freight you haul, and your long-term business goals.
In this article, we will explore the pros and cons of hiring owner operators vs company drivers, as well as provide guidance on how to create an owner operator program within your trucking company.
Pros of Hiring Owner Operators
- Lower costs – When you hire an owner operator, you are not responsible for paying for their truck, fuel, or maintenance. This can result in significant cost savings for your company.
- Flexibility – Owner operators can be a great option if your freight needs fluctuate throughout the year. You can hire them on an as-needed basis, rather than having to maintain a full fleet of company drivers.
- Increased capacity – If you need to increase your capacity quickly, hiring owner operators can be a great solution. You can bring on as many or as few as you need to get the job done.
Cons of Hiring Owner Operators
- Less control – When you hire owner operators, you’re partnering with self-employed individuals running their own ventures. This means that you have less control over their schedule, routes, and the quality of their equipment.
- Recruiting challenges – Finding quality owner operators can be a challenge, especially if you are just starting out.
- Tax considerations – If you hire too many owner operators, you may run the risk of being classified as a “broker” by the IRS, which could result in increased taxes and paperwork.
Pros of Hiring Company Drivers
- More control – hiring company drivers, you will have more control over their schedule, routes, and the quality of their equipment. This can help ensure that your freight is being hauled safely and efficiently.
- Lower recruiting costs – recruiting company drivers is generally less expensive and less time-consuming than recruiting owner operators.
- Potential for loyalty – if you treat your company drivers well, they may be more likely to stick with your company for the long-term.
Cons of Hiring Company Drivers
- Higher costs – you are responsible for paying for their truck, fuel, and maintenance. This can result in higher costs for your company.
- Limited flexibility – if your freight needs fluctuate throughout the year, you may not be able to adjust your workforce as quickly as you would like.
- Compliance challenges – This can be time-consuming and expensive. As an employer, you are responsible for ensuring that your company drivers are in compliance with all state and federal regulations.
Creating an Owner Operator Program
Here are a few key steps you will need to take to create an effective owner operator program and ensure compliance with state and federal regulations:
- Establish clear criteria – you will need to establish clear criteria for hiring owner operators, including minimum equipment standards, safety records, and insurance coverage.
- Set pay rates – determine how much you will pay your owner operators, and whether you will pay them on a per-mile or percentage-of-revenue basis.
- Find owner operators – finding quality owner operators can be a challenge, but there are a few ways to go about it. You can post job listings on trucking-specific job boards, attend industry events, or work with a recruiting agency that specializes in owner operators.
- Review Contract Terms – when onboarding an owner operator, you will need to review and sign a contract that outlines the terms of the working relationship. This should include details such as payment rates, payment terms, and other important provisions.
- Obtain Necessary Documentation – a copy of their driver’s license, their medical certificate, their truck registration, and their insurance certificates, FTA license and their IRP registration, are some of the documents needed to obtain from owner operators.
- Establish Communication Protocols – You will need to establish clear communication protocols, including how you will communicate with the owner operator and how often as it is the key to a successful working relationship with owner operators.
- Track Maintenance Records – you are responsible for ensuring that the owner operator’s truck is properly maintained. You will need to track maintenance records, including when maintenance is performed, what was done, and by whom.
- Monitor Compliance – you are also responsible for ensuring that the owner operator is in compliance with state and federal regulations. This includes tracking hours of service, conducting drug and alcohol testing, and ensuring that the owner operator’s truck meets all safety requirements.
- Develop a retention plan – it is important to develop a retention plan that includes regular communication, fair compensation, and opportunities for growth thus this can be a challenge in retaining quality owner operators.
Onboarding owner operators involves a number of paperwork and housekeeping matters that must be addressed to ensure the success of your program and compliance at the state and federal level. By taking the time to complete these steps properly, you can help ensure a successful working relationship with your owner operators and avoid potential compliance issues down the road.
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