As the ever-evolving global economy continues to churn and change the way the world does business, more and more companies are relying upon teams of independent contractors to supply their labor needs.
Of course, hiring 1099 “contractors” vs. W-2 “employees” has several financial advantages for business owners, including carrying fewer obligations to provide benefits and unemployment insurance. But for some laborers, the distinction between contractor and employee is not so black-and-white.
For fleet managers, who oversee multiple drivers, knowing what type their workers are is of massive importance. Penalties for mislabeling and incorrectly classifying workers can be steep, and when it comes to training their drivers, many companies are walking a tightrope between compliance and excessive “employer control.”
So, how can you be sure your fleet of 1099 contracted drivers stay 1099 contracted drivers? We’re glad you asked!
When it comes to IRS employee classification, there are several key factors the government considers. Chief among these is what’s known as the “20 Factor Test,” a checklist of sorts that the IRS uses to determine classification. Primarily, these areas of focus center around how the business conducts training, and what activities the business makes mandatory for its workers.
Broadly speaking, requiring mandatory “training” is a telltale sign that the worker is a W-2 employee. However, there are ways around this for managers who still want to provide tools for success to their workers and ensure the best possible performance from them.
Fleet managers – and other supervisors – are allowed to provide their contractors with on-the-job “coaching” and feedback. This is different from training, which teaches employees how to do the job in the first place and is required for employment. Coaching can also be referred to internally as “Suggestions for Independent Contractors,” “Helpful Hints,” or “Contractor Best Practices,” just so long as they avoid the term “training,” and the feedback is ongoing and does not need to be completed before the contractor can begin working.
The rise of telematics in fleet management has given business owners new options not only for improving driver safety and efficiency, but for driver coaching, as well.
By capturing and measuring data pertaining to driver phone use, vehicle acceleration and deceleration, speed and location, fleet managers are better able to fully understand how their contractors are driving, and subsequently correct problematic driver behaviors and encourage efficient, productive and safe driving habits.
What’s more, by offering the right suite of tools, fleet telematics can help companies provide effective coaching that doesn’t threaten their workers’ status as independent contractors.
With Zendrive, you get the powerful telematic tools you need to improve the safety and efficiency of your fleet without enforcing mandatory training that would cause your contractors to be classified as employees.
The Zendrive Dashboard gives you the control and oversight to monitor all areas of your drivers’ performance, including Caution, Control, and Focus. Using the sensors built into your drivers’ smart phones, Zendrive measures behaviors like speeding, swerving, braking, acceleration, and even distracted phone use while driving. Indeed, of the 90% of collisions that result from human error, 30% are the direct result of phone use.
Zendrive also gives you the tools to message specific drivers or groups of drivers based on criteria you can set, like those that tend to drive in a “risky” manner. You can provide feedback, advice, suggestions, and – yes – coaching. This feedback loop improves driver performance and is importantly distinct from mandatory training.
Our Zendrive Customer Success team can even facilitate the coaching for you, streamlining the communication of driver best practices and distancing you even further from the costly business risks associated with employee misclassification.
Zendrive takes all the guesswork out of the 1099 versus W-2 conundrum by solving it for you. Now, your workers can drive safer, drive smarter and drive independently.
That’s the power of Zendrive. Give us a shout to see how we can help you and your drivers!