sub-contracted drivers

Does anyone NOT have drivers on their payroll but sub -contract them with a 1099. Does this relieve you from having to carry delivery insurance on them?

if only it was that easy…will not work when the sh1t hits the fan or an old lady otherwise everybody would be doing it

Classifying your drivers as subcontractors is VERY questionable and potentialy crippleing to your business. If you do this and one gets injured without workers comp coverage, a lawyer will probably be able to show they should have been classified as employees. There is a ridiculous amount of information on the IRS website that shows what qualifies and what doesn’t. A few things that stick out to me: You cannot make them where uniforms, You cannot schedule them to work, you cannot train them or tell them how the job needs to be accomplished, You cannot fire them for accomplishing a job in a means that you do not agree with, you cannot keep them from doing the same job for a competitor at the same time they are doing it for you. So by paying as an independant contractor, If you have ever fired someone for driving like an a-hole and getting multiple driver complaints, or for telling the customer to look the word gratuity up in the dictionary, A lawyer will put you out of business over a liability or workers comp claim, regardless of the contract you have written with your drivers. Not to mention the IRS and dept of Labor crawling up your ass about it. Google IRS Independant contractor and you will have a wealth of info with which to make your decision.

The guys above have really made the point that it is a bad idea.

I actually looked at it for a few seconds a while back because this topic domes up frequently. Example with a $10 an hour employee

Employee Employer
6.2% and 6.2% Social Security
1.45% and 1.45% Medicare taxes

Unemployment really only costs you about .8% after your tax returns.

So for every hour they work you would save 77.3 cents, or about 7% off your payroll taxes. That would lower your labor by 1.9% overall. Not only is the savings extremely small relative to the huge risk you would be taking, but if the IRS eever did look into an employee`s tax return, you can bet they will go right after you.

The IRS is always more interested in the employer because they know what your driver made, but they don`t know and want to find out how many people you were mis-classifying as contractors instead of employees.

And finally, regarding the insurance - no help there. IF your “independent contractor” hit someone while driving your pizza with your car topper on, you’re gonna get sued. Independent contractor or not. And so you’d better have that insurance in place.