Special Workers Compensation Rules for Owner Operator Truckers –

Owner-Operator truckers are special in what they do and in some states you’ll find special rules governing how they are treated in regards workers compensation. It can be a confusing situation for both the trucker, the employer and the insurance company providing coverage. Let’s take a look at some of the issues involved with over the road trucking and specifically how the State of Indiana handles Owner Operator Truckers.

According to the US Department of Transportation Office of Motor Carriers and other sources:

  • Approximately 511,000 for hire and private trucking companies operating in the United States;
  • Over 40 million trucks registered;
  • There are 3.4 million truck drivers;
  • Class 8 commercial trucks logged over 129 billion miles per year;
  • The average truck drives what amounts to about 2 times around the world per year.
  • The average long haul daily run is 500 miles;
  • Most long haul drivers will drive over 100,000 miles per year.

In 2008 the trucking industry hauled approximately 69% of all goods amounting to about 10 billion tons valued at over 8 trillion dollars. Now those are some powerful statistics! No doubt the trucking industry knows how to keep the freight moving!

Owner-Operators make up a significant part of those numbers and handling the workers compensation for over the road truckers has it’s challenges. Most independent truckers do not operate under their own authority so they will typically sign some type of  lease agreement with a trucking company so they can haul freight. It’s commonly understood then that an independent trucker is dependent on the trucking company dispatching services so most insurance companies will treat a hired owner-operator as an uninsured contractor and include them within the payroll of the trucking company for rating purposes. Because of this you’ll find many trucking companies will require a certificate of insurance from the owner-operator indicating they have secured coverage. Remember, if the insurance company would have to pay a claim then they will charge a premium.

In the State of Indiana Code, 22-3-6-1 (b)(8) provides that: “An owner-operator that provides a motor vehicle and the services of a driver under a written contract that is subject to….., to a motor carrier is not an employee of the motor carrier for purposes of IC 22-3-2 through IC 22-3-6. The owner-operator may elect to be covered and have the owner-operator’s drivers covered under a workers compensation policy….that insures the motor carrier if the owner-operator pays the premiums as required by the motor carrier. An election by an owner-operator under this subdivision does not terminate the independent contractor status of the owner-operator for any purpose other than the purpose of this subdivision.”

So in Indiana they continue by stating that to be exempt from the Workers Comp Act: “a trucker needs to be an owner-operator that provides a motor vehicle and the services of a driver to a motor carrier under a written contract that is subject to IC 8-2.1-18-46.”

Ok…I’ll stop! But here’s the scoop. If an owner-operator signs a lease/purchase, independent contractor agreement with a trucking company in Indiana, that indicates that the owner-operator is required to provide his equipment and driver services to the trucking company and the agreement is executed under Federal and State Leasing Requirements, then the owner-operator is not an employee of the trucking company.

Here’s a problem. While the agreement may spell out that a trucking company may have exclusive use of the equipment it will not provide or indicate one way or the other support of an employer-employee status which is a foundation on workers compensation claims.

Be careful! While Indiana does a good job of outlining the relationship between an owner-operator and the trucking company you should never make assumptions that you understand how the contract effects the potential for workers compensation coverage.

Why do I mention this? There is specific case law in Indiana that deals with this and other issues surrounding employer-employee status. These questions should always be reviewed by an attorney!

For more information on Indiana and Owner-Operators contact the Indiana Compensation Rating Bureau at: 317-842-2800 or visit their website at  www.icrb.net. 

Other states are different. When questions about owner-operator operations, lease/purchase or operating contracts and agreements come up you should always consult a local attorney familiar with the laws of your state!

We’ll have more in future blogs about workers compensation and the trucking industry.

If you have a problem about how classification codes apply or how payroll is allocated for short or long haul drivers, contact our office for help!