Owner Operators and Workmans’ Compensation Insurance

Many motor carriers utilize the services of independent owner operator truck drivers.  As many as 6,000 such drivers are believed to operate in the Port of Oakland.  Many more operate in the Southern California ports.

Most owner operator drivers own their own trucks and are truly independent contractors.  They operate their own businesses and profit according to their skills and work ethic.  They can decline loads, work for multiple carriers, and take as much time off as they like.  They control their own destiny.

Motor carriers that utilize owner operators also have employees and carry worker’s compensation insurance for their employees.  At the end of each policy year, the worker’s compensation insurer will audit the carrier’s payroll records to determine the appropriate premium for the prior policy year. As a result of these year-end audits, insurers have assessed worker’s compensation premiums to motor carriers for their owner operator drivers. State Fund has been particularly aggressive in this respect and has recently applied a rule where any owner operator that makes in excess of $75,000 in the policy year will be assessed premiums.

If you use owner operators, be prepared for the year-end audit of your worker’s compensation policy.  Have evidence that your owner operators own their own trucks and have operating authority that allows them to haul their own shipments.  Have your 1099 forms to show that you report owner operator income to the IRS.  If you are assessed premiums for owner operators, you should inquire with your legal counsel about protesting the premium assessment.  State Fund and other insurers will consider such protests and adjust premium assessments where supported by the evidence presented.

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