Today trucking is a $725 billion industry, employing nearly 7.3 million Americans and delivering 70 percent of the nation's goods and products. President Trump’s recognition of the importance of the industry led to a special meeting earlier this year with the industry leaders to discuss the major issues affecting trucking. A topic of focus: the Affordable Care Act (ACA).
ACA: A Thorn in the Side of Trucking?
A majority of trucking leaders/business owners feel the ACA has hurt the industry, resulting in increased insurance premium costs, added administrative burdens and extra reporting requirements. The impact on trucking has many industry leaders supporting President Trump’s vow to remove many of health care mandates associated with the ACA. They feel reversing the ACA will provide individuals and businesses greater control over such operational issues as hiring.
Overturning the ACA could benefit the trucking industry in two ways: Businesses that employ large fleets of drivers would have greater flexibility in selecting the type of medical insurance coverage to offer, and there would be far fewer reporting requirements. As well, owner-operators who as independent contractors might not be able to obtain insurance through their companies would not be forced into ACA exchanges.
Owner-Operator Memo: Another Blow to Trucking
In 2015, the head of the Labor Department’s Wage and Hour Division issued a memo related to owner-operator law that produced an array of legal uncertainty for carriers and owner-operators. The memo stated that anyone economically dependent on a singular entity and working exclusively with that entity was officially an employee of that company. Because owner-operators typically prefer to drive exclusively for a specific carrier, they were reclassified as employees, decreasing flexibility for both driver and company and making companies responsible for additional payroll taxes and benefits.
On June 7, the Trump Administration rescinded the 2015 owner-operator memo, effectively allowing owner-operators to continue to work independently in the trucking world.
Recommendations to Trucking Industry Leaders
Whether it is uncertainty over health benefits or doubt about how to employ and manage drivers, companies should be diligent in analyzing the costs associated with employing a driver versus contracting an owner-operator. Similarly, drivers should consider their options when deciding whether to work as a company driver or to purchase their own vehicle and operate as an independent contractor.
The best approach is a proactive one. HBK can assist trucking industry leaders with cost-benefit analyses, advise them on tax incentive options, provide compensation strategies, outline employer rights, detail valuation scenarios, and offer business advice in many other areas related to financial and wealth management. To paraphrase President Trump, contact your HBK professional so we can help make your trucking operation great again!