Owner Operators vs. Independent Contractors: The Differences
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What Owner Operator and Independent Contractor Mean in Trucking
We see the terms “owner operator” and “independent contractor” get thrown around in trucking a lot. They both describe truck drivers who are independent and are not full time employees of one carrier company in particular. These terms also tend to be used interchangeably, but that’s not always correct. All owner operators are independent contractors, but there are key distinctions that make some truck drivers owner operators, and others just independent contractors.
So what is an owner operator? An owner operator is an independent contractor who gets to choose who to work with, get the W-9 from all companies they work with, own their own equipment, carve out their own schedule, etc. Essentially, they get to be their own boss and run their company in any way that they’d like. An owner operator is an independent contractor with a business attached to their name.
However, someone can be an independent contractor in trucking without being an owner operator. Some drivers choose to lease a vehicle from a larger company and operate under their authority without having to become a full-fledged owner operator. Instead of setting up their own carrier company, a driver would be running with another company and using that entity’s authority.
It’s very important to make a distinction between the two because one term (owner operator) is referring to a business owner, while another (independent contractor) is referring to someone that is not an employee and works independently, but in theory they could be leased under an owner operator or larger carrier company.
What is the biggest differentiator between owner operators and independent contractors?
The biggest differentiator between the two is who owns the operating authority. Authority is a designation that every carrier company needs in order to transport goods in the United States. Owner operators have their own authority so that anyone in their business can successfully and legally transport freight. They can haul containers or any other type of freight under their authority. Not all independent contractors have their own authority, so that’s when they look to other companies to work with. This is when they will usually end up contracting with larger carrier companies who provide them with freight, and then they run under that company’s authority.
There are two types of authority: interstate and intrastate authority. Interstate authority is what an owner operator needs if they’re trying to move intermodal and over-the-road freight. This is because the truck driver is either bringing the cargo across state lines, or the freight will eventually cross state lines. Truckers that want to haul freight that originates and terminates within the same state would go ahead and just get intrastate authority, though this type of authority is limiting. They would have to go the extra mile and make sure that each load that they try to pick up has an origin and destination within the same state.
Why do some independent contractors choose not to become owner operators?
There are additional expenses, such as insurance, taxes, and equipment expenses. However, as an owner operator, you get to keep 100% of the revenue generated from each load, whereas independent contractors working for other carriers will almost always have a cut taken out of their earnings.
As long as you are operating under interstate authority, have a power only unit, insurance and can haul 53′ intermodal containers, you can use the DrayNow app to find intermodal loads and haul local freight. Our free load board app has local intermodal loads available to carriers of all sizes to pick up and haul. Owner operators using the DrayNow app can choose the freight that they like at any time on their own accord. The DrayNow app is available all around the country, offering intermodal loads in many drayage markets.
As an owner operator, you will have full autonomy to find your own power only loads, retain 100% of the earnings and be your own boss in the world of intermodal trucking.
If you’re looking to be an owner operator in the state of California, be sure to view our guide for that state.
To see the other posts in this series on owner operators, check out the links below.
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