i just opened my shop and i want to start doing deliveries starting in about a month… what would be the best way to set that up. Independant contractor or employee?
You need to check the labor laws in your state. If you plan to do the contractor route you must follow the law to the letter or you could be in hot water. They look at things like do you controll the hours the driver works, are the drivers exclusively working for you, do you dictate what the drivers wear (uniforms) answering yes to any of these will, in most cases, make the driver an employee not a contractor.
is that a better idea than employee?.. i could get away without them wearing a uniform and such… but they will have the name of the pizza parlor on top of their car.
i see all the spot that do delivery… i wondered if there is some sort of standard…
I believe that in most cases if you are having them with your sign then they would be called employees. The thing here is, a true independent contractor would be available to work for anyone. The contractor that I use has his own company name on his car and delivers for the flower shops as well as other food places. He runs about 6 cars on the road any given night. You would need to check the laws in your state to be sure.
thanks… i’ll look into it.
You are going to have a very difficult time classifying them as independent contractors. I would not risk it.
Here is some information you may find useful:
Spring Cleaning Can Start With Insurance - PMQ, March 2007
Non Owned Auto (Delivery Liability) - More about this one later, but suffice it to say, that I know of no insurance company that will knowingly include this on a Business Owners Policy unless there is a specific application supplement and a hefty premium charge. If you think you have this for $50 to $100 bucksâ€¦. youâ€™re dead wrong.
Automobile Insurance Policy: This policy can provide a combination of liability protection and physical damage coverage for loss due to damage to vehicles owned, maintained, or used by you. You can go as bare bones as you dare or load things up. Again, I like to think of $1,000,000 as a practical minimum these days with a high limit excess or umbrellathat comes in over the basic $1,000,000 for catastrophe protection.
Once again, do not cheap out on limits. This is the only policy thatâ€™s going to stand up when you have an Auto Accident, make sure it has the muscles to do the job. These polices by definition include Auto Liability for bodily injury or property damage you do with the autos listed on the policy. You can also buy coverage for damage to your own auto regardless of who is at fault. On a state-by-state basis there may be coverage available for injuries you or your passengers sustain during an auto accident. Always sign an application for auto insurance and never sign an application that has false information, shaded information, half-truths or just plain lies. Tell the insurance company what you do and but the insurance you need.
Some points to consider: Covered Autos - There is usually a choice of what autos would be included for coverage. The usually choices being â€œowned & listedâ€ autos â€œnon-owned & hiredâ€ autos and â€œany auto.â€ Of course, the most inclusive choice is â€œany auto,â€ and I like this one. But some insurance companies just wonâ€™t do it. Choose the broadest option available and follow the insurance companyâ€™s rule. Make sure the policy really describes what you do. Do not accept a policy that describes your operations as â€œPizzeria â€“ No Deliveryâ€ if you actually deliver!
â€œDelivery Liabilityâ€ - If you deliver, put this in ice burg-sized chunks. No further discussion needed. Do not try to use your personal auto policy to cover business exposures. If you use your auto in business, make sure that you either have a business auto policy or that the insurance company knows exactly what you do with the auto. Remember, they have been at this a lot longer than you. They can, and will, see through any subterfuge you can dream up.
Workers Comp - Most states require that every employer provide Workers Compensation insurance for their employees. This insurance provides coverage for accidents or disease arising from employment as prescribed by the state laws. Benefits can include lost wages, medical expenses, and permanent disfigurement/disability payments. The simple truth is that almost no one has â€œindependent contractorsâ€ in the pizza business. The IRS has a 20-point test that is used to determine â€œindependent contractorâ€ status, and itâ€™s a good bet that almost every one of your workers will not qualify as an â€œindependent contractor.â€ Iâ€™ve heard almost every â€œurban myth, campfire story, insiders â€œsecretâ€ and just plain â€œb.s.â€ line out there. The simple fact is that if your state requires Workers Comp, thereâ€™s no legitimate way around it. That having been said, here are some points to consider:
Many more insurance issues covered here:
A National Network Of Insurance Agents Working For The Pizzeria Owner!
The DIRTY LITTLE SECRET
about “Delivery Liability”
Myths and Urban Legends:
Still, people come up with almost hare brained schemes to deal with this. Here’s some that Iâ€™ve heard of:
“… I have my delivery auto registered in a separate company that owns nothing but the auto so Iâ€™m safe from claims” No, youâ€™re not. In most states common ownership of assets and shared operations may allow an injured person to come right back to you!
“…The delivery person has insurance â€“ Iâ€™m safe” No, youâ€™re not. If the delivery guy has little insurance or if it was just cancelled, you have nothing to protect you.
"… The delivery person doesnâ€™t work for me - they are independent contractors so Iâ€™m out of it" No, youâ€™re not. Just because YOU call someone an independent contractor for tax purposes does not make them one. In the end, a finder of factâ€™ (translation: Court of Law) will determine this on a case by case basis. “…Iâ€™ve got all my assets in my wifeâ€™s name â€“ Iâ€™m judgement-proof…” No, youâ€™re not. Besides still being subject the process and the grief, these arrangements seldom stand up under legal attack.
Now, there are still some things you can do to reduce your costs:
Hire and keep good drivers: Let it be known - IN WRITING that you donâ€™t tolerate bad drivers. Have each driver give you a copy of their drivers abstract every six months - pay the driver to get it ($5). Be ruthless on this - reward good drivers and fire bad ones!
It takes GOOD PAY to keep GOOD DRIVERS! As you can see, one accident with a lifelong disability or a death can be the end to your business. Pay well for the best drivers and you can reduce that risk. There is a reason younger drivers pay MUCH more for car insurance. Hire EXPERIENCED drivers and pay them for the experience and maturity they bring. Pay minimum wage and get minimum experience, maximum liability. Your choice.
I posted this same info back in dec 07 on TTPG. I hope it helps answer your questions.
Good information. The whole model of drivers working for minimum and tips seems flawed to me. You usually end up with grungy, smoking, self-interested employees. We are going to try to change that model. Not sure if we can do it. But drivers should not be compensated any more for driving than other positions in the store. Of course, if they use their own car they will be reimbursed. But driving is one of the easiest and most enjoyable parts of the business. I LOVE driving. It may take buying our own vehicles, but we are determined to pay on individual merit and team performance.
Another thing that I like to remind myself and my drivers of is the fact they are my company’s contact with the customer. I want that contact to be one that refelcts the standards that I hold for the rest of the store as far as cleanliness and friendliness.
Exactly right. Oftentimes the phone order taker and the driver are the only ones making an impression with your customers… with the driver and his car leaving a visual taste in their mind. No matter how sanitary and tasty your pizza is, a dirty, smelly, or sloppy driver will make it seem disgusting.
In the state of Ohio, driver reports are available online for free. If you go to the dmv in person, they cost $5. Don’t know about other states, but worth checking into.