Is the tide turning on the trucking industry’s acceptance of gig workers?

South of the border, the U.S. Department of Labor is changing the criteria for how employers classify workers, replacing the old “ABC” test with a multi-factor “economic” assessment to determine whether a worker is dependent on an employer.

In a nutshell, the rule makes it harder for workers to be independent contractors, or ICs.

Here’s where it gets interesting. Two of the trucking industry’s most powerful lobby groups, the American Trucking Associations (ATA) and the Truckload Carriers Association, vehemently oppose the change.

The ATA called the rule “un-American.” The TCA, which boasts many Canadian members including myself, has vowed “to work with all stakeholders to defeat this anti-industry rule.”

On the surface, these associations seem focused on preserving the owner-operator model. My gut tells me their opposition is also about protecting a future that expands access to gig workers for their members.

Both groups project their members will be short 160,000 truck drivers by 2030. At the same time, the gig economy will only grow as people opt for more flexible schedules and work options.

Hiring gig workers might be their best option.

We see it here in Canada. A lot of legacy carriers are adding a gig component to their driver pool. Their thinking: if you can’t beat’em, join’em. Might as well deal with the inevitable before it’s too late.

Here’s why and how they’re pivoting.

Zero risk

Carriers have done the math. Some estimate that using IC drivers saves a fleet about 20% per truck a year. If it costs $200,000 to run the truck, that translates to $40,000 in annual savings.

The proposed $250,000 fine is a small price to pay to get access to drivers. As long as you have seven ICs, you’re making money regardless of the fine. In other words, zero risk.

T4As

Carriers that use ICs issue T4As instead of T4s come tax time. It’s how you legalize Driver Inc.

Some, but not all, make sure these drivers prove they are paying their taxes. Drivers who don’t comply can be quickly terminated – there’s no severance needed for ICs.

Carriers also know they can have recruiting success by offering perks not usually provided to gig workers, like vacation pay, medical benefits, and “real” training. Talk to your accountant to see what’s best for your fleet and what you can offer without risking your IC’s status. I know enough about accounting to be dangerous.

Deprogramming

Communicating your employment pivot to the staff must be your first step. They read the industry publications and need to be deprogrammed. Guaranteed they will have a negative perception of your IC drivers if you don’t set the record straight. Being tagged as “cheaters, crooks, and tax dodgers” won’t give these drivers much chance to succeed. It will also destroy your culture.

Your HR department will have to navigate how to treat a group of drivers who aren’t employees but are part of the company’s operations. Given the ethnic makeup of IC drivers right now, they might have to schedule around holidays and celebrations that you don’t plan for now, like Diwali and Orthodox Christmas.

You should also give your employee drivers the option to convert to independent contractors. Don’t worry. They won’t give up all the perks of being an employee.

Acquiring a gig fleet

More carriers than ever have reached out to me about acquiring the assets of a gig fleet. Instead of integrating gig workers into their operations and dealing with potential backlash from their staff, they want to run separate T4 and T4A fleets under one roof.

The timing couldn’t be better. Gig fleets of all sizes have taken it on the chin during the freight recession. They were highly leveraged to start with. Interest rates and spiraling costs have crippled them. Loyalty is not a trait of their third-party customers.

It’s the perfect time if you’re considering the acquisition route regardless. Many legacy carrier owners don’t want to adapt to the changing landscape. They’re selling in droves. The good news is there are lots of buyers out there willing to help an owner change gigs from boss to full-time golf and pickleball player.