Can I Pay My Truck Drivers by 1099 or Do I Have to Pay by W-2?
⁃ When should workers be considered employees?
⁃ How much will filing W2s cost your business?
⁃ What is the cost if you don’t file a W2 when you should?
W-2 or 1099?
There are two types of tests to determine whether or not a worker is an employee or could be classified as an independent contractor: the Common Test and the ABC Test.
The Common Test
IRS 20 factor test
For trucking companies with owner-operators, the following parts of the test would be the most significant.
ABC Test
This test, as you may have guessed, is three parts.
What test will I have to follow?
States are mixed about half-and-half common law and ABC tests. If you are in an ABC state that stricter test will supersede the IRS common test. Some states just follow the A and C of the ABC law making it more possible for you to hire owner-operators. The chart below has the breakdown for each state, but consult an attorney to be sure how your state operates.
State | Law | State | Law |
Alabama | Common | Montana | A&C of ABC |
Alaska | ABC | Nebraska | ABC |
Arizona | Common | Nevada | ABC |
Arkansas | ABC | New Hampshire | ABC |
California | ABC | New Jersey | ABC |
Colorado | A&C of ABC | New Mexico | ABC |
Connecticut | ABC | New York | Common |
Delaware | ABC | North Carolina | Common |
DC | Common | North Dakota | Common |
Florida | Common | Ohio | ABC |
Georgia | ABC | Oklahoma | A&C or A&B of ABC |
Hawaii | ABC | Oregan | ABC |
Idaho | A&C of ABC | Pennsylvania | A&C of ABC |
Illinois | ABC | Puerto Rico | ABC |
Indiana | ABC | Rhode Island | ABC |
Iowa | Common | South Carolina | Common |
Kansas | ABC | South Dakota | Common |
Kentucky | Common | Tennessee | ABC |
Louisiana | ABC | Texas | Common |
Maine | ABC | Utah | ABC |
Maryland | ABC | Vermont | ABC |
Massachusetts | ABC | Virginia | A&B or A&C of ABC |
Michigan | Common | Washington | ABC |
Minnesota | Common | West Virginia | ABC |
Mississippi | Common | Wisconsin | A&C of ABC |
Missouri | Common | Wyoming | A&C of ABC |
Costs of Paying Truck Drivers as a W-2
Costs of not paying your truck driver W-2 when you should have paid them that way.
Final thoughts on paying a truck driver as a 1099
Written by Mike Ritzema
With over 20 years of experience in entrepreneurship, management, business planning, financial analysis, software engineering, operations, and decision analysis, Mike has the breadth of knowledge and depth of experience needed to quickly understand entrepreneurs’ businesses and craft the most suitable solutions.