Should you lease your trucks to your drivers?

Should you lease your trucks to your drivers?

Truck on roadThe decision on whether or not to lease company trucks to drivers is one of the largest and most complicated decisions a carrier can make. A transportation lawyer in Vernon Hills knows that the potential consequences – both good and bad – can be far-reaching for a company, depending on if the leasing is done properly or not.

Prior to engaging in a contract for leasing and purchasing company trucks with drivers, carriers should consider the following, including commonly seen benefits and risks.

Rocky history

In the past, many carrier companies created lease-purchase programs with little benefit and a substantial amount of risk for drivers. According to Truckinginfo, many drivers who entered into these contracts are treated unfairly and trapped in situations over which they have little to no control. For these reasons, few drivers are willing to even consider lease-purchase programs today. However, when done well, these programs can provide a better working environment for independent contractors while helping carriers reach their goals.

Benefits

Depending on the structure of a lease-purchase program, the benefits to carrier companies can be immense. Carriers reduce their risk of liability in the event of an accident or cargo loss. The company’s tax burden is also significantly lessened when they pay independent contractors instead of employees.

Risks

Many carrier companies have used lease-purchase programs as a means of evading taxes and other employer benefit obligations. When carriers classify drivers as independent owner-operators, they can catch the eye of the IRS and face increased chances of an audit. According to Go By Truck News, the IRS plans on recovering $6.9 billion in misclassification audits in the coming 10 years, and carriers are a large piece of that puzzle. Illinois is one of eight states that have incredibly strict laws governing owner-operator status.

A transportation lawyer in Vernon Hills understands that for carriers to stay out of danger, they must follow a true independent contractor-carrier relationship. Unfortunately, this means that carriers lose the ability to guide and help their drivers, and thus the opportunity to help them in difficult times. Third-party programs managed by outside companies are a desirable option that allows carriers to maintain a proper distance while still providing independent contractors with the support that they need and want.

Ultimately, the decision to lease company trucks to drivers should be made very carefully and with all relevant factors in mind. Carriers who may be considering this option in the future should meet with a transportation lawyer in Vernon Hills prior to creating or executing any leasing documents. An attorney can help carriers keep in compliance with laws and regulations, and may be able to make the overall process of leasing trucks to drivers less burdensome.

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