Home > Forum > Percentage Pay For Drivers

Percentage Pay for Drivers

Dec 30, 2015 at 05:19 PM CST
- 1
I am wondering what other drivers or companies pay to the drivers on a percentage basis and your thoughts??? We pay 25%-27% to our 1099 driver's of gross revenue, including fuel surcharge. Our full time OTR drivers earn $60k-$70k per year and home every weekend, plus its all newer equipment. I feel it is a fair rate. We do not have any drivers on a W2. However, we are struggling what to set the percentage pay rate at for future W2 drivers. Any thoughts or comments are appreciated.
Replied on Wed, Dec 30, 2015 at 06:10 PM CST
I start at 25% and go up based on performance and time with me. Right now have two at 26% and one that I just bumped to 30%. 2014 he cleared over 50k after taxes. 2015s been rough looks like around 40k after taxes. The fsc is added in to the rate and is part of the percent the drivers get. My drivers are home most weekends it's more up to them. They can take off about anytime they want.
Replied on Wed, Dec 30, 2015 at 06:11 PM CST
All w2, got burned on the 1099 deal.
Replied on Wed, Dec 30, 2015 at 08:43 PM CST
We pay our drivers 25% of the truck gross. 99% of what we do is bid without a fuel surcharge. If there is a fuel surcharge the driver gets 25% of that as it part of the truck gross. As has been posted in another thread work comp continues to go up each year. We had a driver that was involved in a accident that left him off work for the better part of two years. While we had to fight with the work comp many times to make sure he was recieving his pay and medical bills was being paid, he was glad that we had work comp and to be covered. His medical bills was well north of 200,000. I know that I wouldn't have wanted to pay that amount out of my pocket if I had been hurt and I wouldn't expect an employee to want to either. Had he been being 1099 instead of being a true employee he would have been the one paying the doctor and trying to figure out how to live off of no income. While the work comp pay check is nothing to brag about it is a lot better than nothing. The cost of paying work comp and uneployment is figured into our operating cost and is part of our rates.
Replied on Wed, Dec 30, 2015 at 11:06 PM CST
+ 1
Guys I run Walkiing Floors. Very expensive and you can ruin or cause major damage in 30 seconds or less. I start my people at 23% and give them a raise at 90 days to 24% then 25% at a year. For me I HAVE to do it this way because of the damage to equipment in the "Learning Phase". The right people are completely understanding and try to prove their worth in fast time. My guys are W2. Work Comp and all, but no benefits, Wish I could. My people are in the 60K per year column if they are willing to run when they are out. We are very liberal with home time when they return. Nothing is forced, but they have to be realistic. Anyone that stays past 90 days becomes family. I am not the devil. At this time 25% IS MY TOP, But I would consider more for some of the people I have at this time. No way more than 27% ever in this business climate.
Art Pfluger
Replied on Thu, Dec 31, 2015 at 07:10 AM CST
- 1
Thank you all for your comments. My thought is, if I went to a W2, would be to start at 23% and scale up to 25% over time after the driver meets certain criteria. I believe the 1099 can really benefit the driver if they know how to use it for deductions, but not all drivers are the best money managers. It's been a challenge hiring new drivers this year as they all seem turned off by the 1099. However, W2 employees are expensive and the taxes are ridiculous.
Replied on Thu, Dec 31, 2015 at 09:49 AM CST
Art, I know what you mean about damage on Walking Floors. I hired a guy once to deleiver for me and I bolted a block of metal onto the directional valve so he could not walk it backwards. Actually I am afraid I might do it myself sometime.
Replied on Thu, Dec 31, 2015 at 10:15 AM CST
+ 9
I normally just read these forums because responding and showing my thoughts in general don't really accomplish anything other than wasting my time. For the last several years i have heard alot of complaining on this forum about brokers and rates and blaming everything except the small business owner that makes the decision to haul the load. Here we have a conversation about paying drivers on a percentage scale as an employee then saying your giving them a 1099 at the end of the year. 1099 my rear end. Here is the guy who is scooping up cheap frieght because he is operating at a huge advantage over legal motor carriers paying Workers comp, Unemployment insurance, Social security and medicare which alone that are about 7.5% of payroll. I really dont care how you run your business there is always going to be people in this industry taking short cuts and bringing the rates down. My issue is that all you people who whine about brokers and cheap customers should be all over this guy and how he runs his business. I have conversations with customers on a daily basis telling me my rates are too high and they tell me other guys are doing it for less money on a regular basis. This is how you haul cheap freight.

Replied on Thu, Dec 31, 2015 at 10:44 AM CST
+ 1
Originally Posted by: MATTHEW HAGAN
Quote: "I normally just read these forums because responding and showing my thoughts in general don't really accomplish anything other than wasting my time. For the last several years i have heard alot of complaining on this forum about brokers and rates and blaming everything except the small business owner that makes the decision to haul the load. Here we have a conversation about paying drivers on a percentage scale as an employee then saying your giving them a 1099 at the end of the year. 1099 my rear end. Here is the guy who is scooping up cheap frieght because he is operating at a huge advantage over legal motor carriers paying Workers comp, Unemployment insurance, Social security and medicare which alone that are about 7.5% of payroll. I really dont care how you run your business there is always going to be people in this industry taking short cuts and bringing the rates down. My issue is that all you people who whine about brokers and cheap customers should be all over this guy and how he runs his business. I have conversations with customers on a daily basis telling me my rates are too high and they tell me other guys are doing it for less money on a regular basis. This is how you haul cheap freight. "

That's a very good reply Matthew.
Replied on Thu, Dec 31, 2015 at 11:14 AM CST
+ 1
I would stop the 1099 in a heartbeat if I were you. It is against the law to 1099 a driver cause they are actually your employee in your truck not theirs. They are not contract carries. If the right agency finds out you could be out of business. It happened to a local guy I know. Just saying.
Replied on Thu, Dec 31, 2015 at 11:20 AM CST
+ 2
And yes its expensive to w2 them thats why you do not haul for cheap! When you 1099 a driver the driver is paying your taxes on that amount of the 1099. I can not believe some of the stuff that gets posted . I do not post very much but I had to this time. Although I kept alot of thought to myself. Everyone have a Happy New Year!
Replied on Thu, Dec 31, 2015 at 11:48 AM CST
+ 2
I don't blame the drivers that don't want to be 1099'd. Your pushing your half of the income taxes back onto the driver plus the workers comp they will not be covered by.
Replied on Thu, Dec 31, 2015 at 12:54 PM CST
Just wait till one of hose 1099 guys doesnt pay their taxes.
Replied on Thu, Dec 31, 2015 at 01:04 PM CST

I think 23% is pretty low, unless you have some really good paying freight. Come on lets not act like brokers.

Replied on Thu, Dec 31, 2015 at 03:02 PM CST
+ 1
Originally Posted by: MATTHEW HAGAN
Quote: "I normally just read these forums because responding and showing my thoughts in general don't really accomplish anything other than wasting my time. For the last several years i have heard alot of complaining on this forum about brokers and rates and blaming everything except the small business owner that makes the decision to haul the load. Here we have a conversation about paying drivers on a percentage scale as an employee then saying your giving them a 1099 at the end of the year. 1099 my rear end. Here is the guy who is scooping up cheap frieght because he is operating at a huge advantage over legal motor carriers paying Workers comp, Unemployment insurance, Social security and medicare which alone that are about 7.5% of payroll. I really dont care how you run your business there is always going to be people in this industry taking short cuts and bringing the rates down. My issue is that all you people who whine about brokers and cheap customers should be all over this guy and how he runs his business. I have conversations with customers on a daily basis telling me my rates are too high and they tell me other guys are doing it for less money on a regular basis. This is how you haul cheap freight. "

I understand your frustration Matthew, but a few points. One, you don't know my business. Two, The driver's I have want to be on 1099 because of their own situations. Three, I've had the accountants and attorneys go through it all so I have my bases covered. Finally, we do not haul the cheap freight. My guys and I will park the trucks and go do other things rather than haul cheap freight. I still have the same headaches as everyone else with authority, plates, commercial insurance, drug-testing, and every other bs thing we have to deal with in trucking.

Where my original post comes into play is I was asking what are fair rates for W2 drivers or any driver for that matter? I have a new recruit that wants to go on W2, so that's the question I asked.
Replied on Thu, Dec 31, 2015 at 04:26 PM CST
Originally Posted by: RYAN SCHWIETERMAN
Quote: "I understand your frustration Matthew, but a few points. One, you don't know my business. Two, The driver's I have want to be on 1099 because of their own situations. Three, I've had the accountants and attorneys go through it all so I have my bases covered. Finally, we do not haul the cheap freight. My guys and I will park the trucks and go do other things rather than haul cheap freight. I still have the same headaches as everyone else with authority, plates, commercial insurance, drug-testing, and every other bs thing we have to deal with in trucking. Where my original post comes into play is I was asking what are fair rates for W2 drivers or any driver for that matter? I have a new recruit that wants to go on W2, so that's the question I asked."

Do you pay work comp, unemployment, and social security on you employees that you 1099? If you don't then you are able to operate at a cheaper cost because that is less overhead than the man that does. If you don't provide these to you drivers what do you do when one gets hurt?
Replied on Thu, Dec 31, 2015 at 04:29 PM CST
Originally Posted by: DANIEL CORBIN
Quote: " I think 23% is pretty low, unless you have some really good paying freight. Come on lets not act like brokers."

I know of a man that pays his driver 20% and the driver finds most of his own work.
Replied on Thu, Dec 31, 2015 at 04:50 PM CST
+ 2
Ryan, I did not reply to this post in order to start an arguement however the very fact that you actually believe you have a choice in whether you provide a 1099 or a W2 to a driver is absolutley ridiculous. I would almost be willing to accept you found some lawyer to give you bad advice except your statements made in this forum make it completely transparent that what you have is employees not INDEPENDANT CONTRACTORS. Undoubtably there are many questionable ways that large carriers get away with basically the same thing however even it that is the case it always involves a lease or lease purchase of equipment. SInce your stated clearly you pay 25-27% to your 1099 drivers that is clearly not how you operate. Also it makes no difference how a driver tells you he wants to be paid the minute he steps off that truck and twists his ankle the state will own you. Furthurmore assuming you do hire a w2 driver aka employee who has the same job as the 1099 driver you will be proving the governments case for them in court. As far as my statement that you are one of the guys hauling cheap frieght I am not so sure i would take that as an insult. If i could find a way to run my trucks on water i would drop my rates my at least $2 per mile and be the Walmart of trucking and i wouldn't feel guilty in the least. What i am saying is that clearly your operating costs are much lower than mine therefore your ability to haul freight much cheaper and still be profitable is simply a fact. Now let me answer your question using my current rates

L&I $4.9393 per hour based on 520 hours per qtr full time OTR driver in Wa state = 2568.44 per driver
UI/EAF Wa state your rates adjusted based on experience 3.53% of payroll.
SSI/MEDICARE 7.5% of payroll.

$240,000 gross @ 25% = $60,000
Workers Comp $10273.76
Unemployment $2118.00
ssi medicare employer $4500.00

Total additional cost =$16,891.76 which is about 7% of your 240,000 gross.

So let me ask you can you afford to pay your 1099 drivers 32% of gross?
Replied on Thu, Dec 31, 2015 at 06:16 PM CST
+ 1
Different states have different laws and regulations as to what is 1099 vs W-2. The IRS has a basic questionaire that you must meet for individuals to be considered 1099. To each business their own decision is what I say, there is a reason that we have both options available. Just because you don't agree with one or the other does not make it wrong or right. I personally have always preferred to be a 1099 sub-contractor vs a W-2 employee, then I could take the deductions afforded with being self-employed that I could not take as an employee. That is my personal take on the issue, others may prefer to be an employee or have employee's.
Replied on Thu, Dec 31, 2015 at 07:42 PM CST
+ 1
Alfred,

You are correct about each state having slight differences in whom they consider an independant contractor. However they are all extremely simple to understand including the IRS. The driver better have an ownership interest in at least the power unit and he must have the ability to work for other customers not just your company. Which is why the larger companies sign the lease O/O i imagine the way they can justify saying you have the ability to work for other customers is simply with an open ended pay off clause in the lease purchase. Simply being a driver with a toolbox and a pair of gloves wont cut it anywhere. It is possible that in this case there is some sort of lease agreement but when the percentage amount of gross mentioned is 25-27% it just doesn't add up. We can simply agree to disagree on this but my main point is when you subracting these large percentage costs you start seeing how some companies can pick up cheap frieght and stay in business.
Replied on Thu, Dec 31, 2015 at 07:44 PM CST
- 1
Originally Posted by: DAVID HAYES
Quote: "I know of a man that pays his driver 20% and the driver finds most of his own work."

If their on the east coast send them my way I start at 25%. Most drivers I know would get up and walk out of an interview at any thing less then 25% unless they fresh out of school. My drivers are more independent than most O/O. But I still pay them as w2 employees. I my self would rather be a 1099 and keep up with my own expenses.
Replied on Thu, Dec 31, 2015 at 08:00 PM CST
Originally Posted by: MATTHEW HAGAN
Quote: "Alfred, You are correct about each state having slight differences in whom they consider an independant contractor. However they are all extremely simple to understand including the IRS. The driver better have an ownership interest in at least the power unit and he must have the ability to work for other customers not just your company. Which is why the larger companies sign the lease O/O i imagine the way they can justify saying you have the ability to work for other customers is simply with an open ended pay off clause in the lease purchase. Simply being a driver with a toolbox and a pair of gloves wont cut it anywhere. It is possible that in this case there is some sort of lease agreement but when the percentage amount of gross mentioned is 25-27% it just doesn't add up. We can simply agree to disagree on this but my main point is when you subracting these large percentage costs you start seeing how some companies can pick up cheap frieght and stay in business."

I have had my program reviewed by both the IRS and my attorney, it checks out 100%. I would not want to get into a pissing contest with the government over such an issue. The reason I went 1099 all the way is because I grew weary of the attitudes that employee's tend to have. An employee tends to not have pride in their work ethic, their appearance, the way they take care of the equipment. Once again we rent the equipment, along with a business package, they choose the payment plan that they desire, they choose where and when they want to fuel, they choose where they like to run, and if they want to haul their own freight under out authority that is fine as long as the customer has the credit and pays. I run an owner operator school and am not into having drivers I prefer operators (just a little different mentality there). I actually help our graduates get their own authority when they feel they are ready. How many others out there do the same? If my state told me that I had to go back to W-2 employee's so they could keep the unemployment taxes, along with others, well I would just have to sell my house, and business in Missouri and find another state to do business in. I believe in treating those that work with me like partners, that is the way I like to be treated when I work for or with others, to include our shipper partners, our broker partners, and our operator partners. I don't want to be Lord and Master over those that work with me, I just want to be the King of my little piece of the pie. By the way I gave you a like for your statement that we agree to disagree. Amen brother.
Replied on Thu, Dec 31, 2015 at 08:26 PM CST
Alfred,

I totally understand your feelings about drivers which is why i decided to start a brokerage business that i run in addition to my trucking company. I couldn't see any other legal or uncomplicated way of doing what you are talking about. The first O/O i had i sold him a truck on contract and financed in his startup costs and i rented him a trailer. The O/O's i work with own thier power unit and handle the same frieght and lanes that my drivers do. I do not currently do any brokering for outside trucks or work the excess frieght in my area because honeslty the 8% isn't worth the headaches on either the customer or the carrier side in my opinion. Just couldn't sleep at night knowing i have a truck heading half way accross the country and knowing i have nothing for him other than the cheap stuff that ends up on the internet. Happy new year!
Replied on Thu, Dec 31, 2015 at 08:32 PM CST
Originally Posted by: MATTHEW HAGAN
Quote: "Alfred, I totally understand your feelings about drivers which is why i decided to start a brokerage business that i run in addition to my trucking company. I couldn't see any other legal or uncomplicated way of doing what you are talking about. The first O/O i had i sold him a truck on contract and financed in his startup costs and i rented him a trailer. The O/O's i work with own thier power unit and handle the same frieght and lanes that my drivers do. I do not currently do any brokering for outside trucks or work the excess frieght in my area because honeslty the 8% isn't worth the headaches on either the customer or the carrier side in my opinion. Just couldn't sleep at night knowing i have a truck heading half way accross the country and knowing i have nothing for him other than the cheap stuff that ends up on the internet. Happy new year!"

You have a happy New Year as well. As a matter of fact all of us have a happy New Year!!!!!:D
Replied on Thu, Dec 31, 2015 at 08:36 PM CST
Alfred,
I totally forgot to mention the biggest reason i decide on the brokerage route which is my fear of having an O/O run under my authority. It is so hard these days to stay on the right side of the DOT. I don't know how you manage O/O's in that situation but that scares the heck outa me..
Replied on Thu, Dec 31, 2015 at 08:49 PM CST
Originally Posted by: MATTHEW HAGAN
Quote: "Alfred, I totally forgot to mention the biggest reason i decide on the brokerage route which is my fear of having an O/O run under my authority. It is so hard these days to stay on the right side of the DOT. I don't know how you manage O/O's in that situation but that scares the heck outa me.."

I have real good attorneys. They have kept us out of trouble many a time, like insurance a necessary evil, like brokers, LOL. Don't get too tipsy, I got to go pick my wife up from the airport she is coming in from Vegas, we are heading to San Antoino in the morning to see the Spurs play at the Texas shootout this weekend. I hope none of those drunk bassturds run me off the road on the way. LOL
Replied on Thu, Dec 31, 2015 at 11:01 PM CST
Originally Posted by: DANIEL CORBIN
Quote: "If their on the east coast send them my way I start at 25%. Most drivers I know would get up and walk out of an interview at any thing less then 25% unless they fresh out of school. My drivers are more independent than most O/O. But I still pay them as w2 employees. I my self would rather be a 1099 and keep up with my own expenses."

He is in Kansas. Works for a farmer that only has him in the field about 5 weeks out of the year. He gets a brand new truck and trailer every three years and his ride becomes a farm truck. His truck is tagged as a comerical truck but the farm pays for the new truck and trailer. He is happy as a pig in slop.
Replied on Thu, Dec 31, 2015 at 11:05 PM CST
Originally Posted by: ALFRED JORDAN
Quote: "I have had my program reviewed by both the IRS and my attorney, it checks out 100%. I would not want to get into a pissing contest with the government over such an issue. The reason I went 1099 all the way is because I grew weary of the attitudes that employee's tend to have. An employee tends to not have pride in their work ethic, their appearance, the way they take care of the equipment. Once again we rent the equipment, along with a business package, they choose the payment plan that they desire, they choose where and when they want to fuel, they choose where they like to run, and if they want to haul their own freight under out authority that is fine as long as the customer has the credit and pays. I run an owner operator school and am not into having drivers I prefer operators (just a little different mentality there). I actually help our graduates get their own authority when they feel they are ready. How many others out there do the same? If my state told me that I had to go back to W-2 employee's so they could keep the unemployment taxes, along with others, well I would just have to sell my house, and business in Missouri and find another state to do business in. I believe in treating those that work with me like partners, that is the way I like to be treated when I work for or with others, to include our shipper partners, our broker partners, and our operator partners. I don't want to be Lord and Master over those that work with me, I just want to be the King of my little piece of the pie. By the way I gave you a like for your statement that we agree to disagree. Amen brother."

Doing what you do is different than paying a person as a driver and then 1099 him.
Replied on Fri, Jan 01, 2016 at 11:00 AM CST
We have been W2 since the begining, wouldn't think of it any other way. Start our drivers based on experience, each year they have no accidents, tickets, running out of fuel etc. they get $500 and .25% raise. We pay the percentage of 100% what the truck gets so routes pay will fluctate with fuel. Have heard them say they wish diesel was $5/gallon...it don't cost them much to drive to work. We have them home everynight and every weekend. Pay 6 holidays, 2 weeks vacation and 2 sick days per year. We are a small company...have 3 trucks and 2 full time drivers, they are 61 and 62 and have drove all their life, alot of it over the road. I'm 34 and know how lucky I am so I treat them just as good as I can, if they need off for something no big deal...they are like family to us. The work comp thing from above is right on as well. Had one of them slip on ice at the truck stop, fell and tore a rotator cuff off several weeks, if I didn't have work comp to take care of his bills and keep a pay check coming I wouldn't have him today.
Replied on Sat, Jan 02, 2016 at 10:03 AM CST
I have a friend who does this and it is working quite well.He owns the truck by the way

say the truck grosses 4000 a week,and fuel runs , for example 1000
that leaves 3000,take 25 % of that for truck expenses etc,and split the rest with the driver
2250 divided by 2 equals 1125 to the driver for the week
fuel surcharge should go to the truck owner,not the driver
unless he owns the truck
Replied on Sat, Jan 02, 2016 at 12:07 PM CST
I guess I've been doing it wrong. I didn't know I was supposed to take out the fuel and expenses first. I learn something new everyday.
Replied on Sat, Jan 02, 2016 at 12:11 PM CST
I wouldn`t say you have been doing it wrong.That works for my friend,who carries a lot of responsibility since the trucks and authority is in his name.He derserves to make a profit qnd not have to spend it on truck taxes,repairs etc

also,any detention,layovers,tonu ,he shares with the driver

Replied on Sat, Jan 02, 2016 at 06:09 PM CST
So the driver that does not own truck should pay for repairs, fuel, ect. Before he gets his percent. I've all ways figured 25% to driver, 50% to keep truck going, and 25% for the company. But if he can get away with it more power to him.
Replied on Sat, Jan 02, 2016 at 07:49 PM CST
no,my friend pays for all that,the driver don`t pay for anything
but the owner takes the fuel plus 25% for expenses and splits the rest with the driver..(except fuel surcharge)

people can do it anyway they want if everyone`s happy
Replied on Sat, Jan 02, 2016 at 07:52 PM CST
Yes that one great thing about trucking we can still run our business like we want. Well some what.
Replied on Fri, Jan 08, 2016 at 04:18 PM CST
+ 1

Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how services are performed.

If a driver is driving someone else's truck, dispatched by them, routed by them and told where to fuel they are your employee not an independent contractor. If they are leasing your truck, then they are an independent contractor. Even if the person driving your truck does their own routing and fueling, they are still your employee.

You are not an independent contractor (IC) if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.

If you are driving someone else's truck and they are paying all the expenses of the vehicle such as fuel, maintenance, etc. and the driver draws a paycheck whether commission or paid by the mile, then they are your EMPLOYEE and should be given a W-2.

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Employee-Common-Law-Employee
https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Defined