Truck Drivers: Employees or Independent Contractors? It Matters for Workers’ Comp

Driver climbs out of back of truck
A trucker enters a trailer, one of the risks drivers take often. (Risk Administration Services via YouTube)

Whether truck drivers are classified as employees or independent contractors is becoming an increasingly difficult challenge for many motor carriers when it comes to workers’ compensation and other insurance coverages, industry experts said.

Over the past 10 years, the trucking industry has undergone a “fundamental” shift to more motor carriers having independent contractor and owner-operators as drivers, instead of employee drivers, said Sam Tucker, CEO of Carrier Risk Solutions, which provides safety and compliance services to motor carriers.

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Workers’ compensation coverage was once very expensive for trucking companies, he said, which compelled some to search for savings by “switching to different classifications of drivers.”

Chris Gulker, transportation specialist at insurance broker TrueNorth Cos., said that evaluating work injury programs and requirements for independent contractors — effectively, owner-operators — versus employee drivers is becoming “an increasingly complex challenge.”



In most cases, motor carriers will allow owner-operators to provide evidence of either workers’ compensation or occupational accident coverage, the latter of which is a more attractively priced alternative to traditional workers’ compensation, Gulker said.

Occupational accident insurance is essentially workers’ compensation “light,” Tucker said. It offers better benefits than health insurance but is not as comprehensive as workers’ compensation, which is reserved for employees of a company only, he said.

James Burg, president of James Burg Trucking Co., said there are “a lot of companies” that he is aware of that do not enforce having a workers’ compensation policy for their subcontractors.

“I see a lot of sidestepping to occupational hazard insurance for the worker or the independent contractor who’s doing the work, when that person really should be covered under workers’ comp in the state that they domicile,” Burg said.

Understanding the workers’ compensation environments at the state and national levels “is paramount,” Gulker said, as allowing occupational accident in certain states violates statutes specific to trucking independent contractors. In other states, there may be negative case law and/or “an overall unfriendly environment” toward independent contractor classification, he said.

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Tim Horgan, director of marketing at insurance broker Hub International, said recent court rulings in California that upheld state regulations that define independent contractors as employees has complicated workers’ compensation for fleets. For example, a large motor carrier in California might have independent contractor drivers and company drivers, but California regulations defines all the drivers as employees, Horgan said.

“So the motor carrier must pay workers’ compensation premiums on all drivers, regardless of status,” Horgan said.

Tucker, meanwhile, said that most of his clients — especially the smaller ones — operate their businesses in ways in which owner-operators lease onto the motor carrier’s DOT number in exchange for various services, such as insurance. “This means if the owner of a small trucking company does not require the driver to have occupational hazard insurance, they’re opening themselves up to a possible workers’ compensation claim, and possible fines.”

When a motor carrier gets hit with a workers’ compensation claim, depending on the jurisdiction, “a court could rule that the driver should have been classified as an employee instead of an independent contractor, and that the motor carrier should have bought workers’ compensation insurance but didn’t,” Tucker said. “The motor carrier is then likely not only to get fined but also pay the claim out of pocket.”