For decades, the trucking industry has utilized owner-operators (OO) and independent contractors (IC) to transport goods across the U.S. as a solution to the fluctuating demand for freight transportation, according to the American Transportation Research Institute (ATRI). Through the years, the nature of the independent trucker lifestyle has appealed to many drivers, as it gives them autonomy over the services they offer.
Recently, however, new legislation pertaining to employment status classification has been introduced in various states, threatening the eligibility of drivers to work as OOs/ICs. The most notable legislation is California’s Assembly Bill No. 5 (AB 5), or the “gig worker bill,” which was signed into law in September 2019 and took effect in January 2020.
The California Trucking Association (CTA) filed a lawsuit challenging AB 5 in the U.S. Southern District Court. In January 2020, the District Court ruled in favor of CTA and issued a preliminary injunction that blocked the state from enforcing AB 5 against motor carriers.
Then, this April, a three-judge panel of the 9th Circuit Court of Appeals voted 2-1 to reverse the preliminary injunction. The court denied a request for a rehearing in June, then granted a stay to keep trucking’s injunction in place until the case plays out in the U.S. Supreme Court.
In addition, other states, including Washington, New Jersey, and New York, have proposed similar laws using AB 5 as an example.
“While the legal and regulatory landscape has been mired in controversy and lack of clarity, OO/IC drivers have and continue to play a key role in meeting the needs of the trucking industry,” ATRI pointed out in its latest research analysis.
Given the legal and regulatory uncertainties and differences in how OO/IC drivers can operate in the U.S., ATRI undertook a study to gather perspectives from independent truckers. On Dec. 1, ATRI released the results of its analysis examining the differing motivators for why truck drivers choose to be company drivers or owner-operator/independent contractors.
ATRI’s Research Advisory Committee prioritized this research to better understand the role of OOs/ICs in the trucking industry, and how legislative attempts to reclassify OOs/ICs as company drivers would impact those individuals and supply chains in general.
ATRI’s latest research includes respondent data from more 2,000 professional truck drivers, of whom more than two-thirds are OOs/ICs.
A large percentage of independent drivers expected they would experience significant decreases in their job satisfaction (73%) and annual income (68.3%) if they were reclassified as company drivers, according to ATRI data.
“ATRI’s analysis validates what we know to be true with our professional truck drivers—those who choose to be owner-operators are often motivated by the desire to be in charge of their schedule and work environment,” Eric Fuller, president and CEO of U.S. Xpress Enterprises, said in a statement. “Understanding what motivates our company drivers and owner/operators allows us to better tailor offerings as we continue to focus on recruitment and retention.”
When presented with identical factors that motivated their decision to be company drivers or OOs/ICs, company drivers indicated their top three motivators were job security/stability, income, and health care/retirement savings. Among OO/IC, the top three motivating factors were independence/ability to set hours, schedule/flexibility, and choice of routes/length of haul.
ATRI’s analysis also examined the compensation models used with company drivers and OOs/ICs and driver satisfaction levels with each. Both company drivers and OOs/ICs ranked income as an important motivator and in terms of satisfaction, 68.9% of company drivers and 80.1% of OOs/ICs indicated being very satisfied/satisfied with their income. More than 50% of OOs/ICs in ATRI’s dataset reported net incomes of over $75,000 in the previous year while nearly 70% of company drivers indicated their annual wages fell in the $50,000 to $100,000 range.
In addition to examining the differences between company drivers and independent contractors, ATRI offers insight into the different motivating factors for female truck drivers versus their male counterparts. Among female company drivers, 84.3% indicated health care/retirement savings was an important motivating factor for becoming company drivers. Female OOs/ICs, on the other hand, rank independence/ability to set hours, schedule/flexibility, and income as their top three motivating factors for choosing to be an OO/IC, with more than 90% of female OOs/ICs ranking each motivating factor as extremely important/important.
ATRI’s full report is available for download.