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Trucking & Transportation Companies: Employee Classification for Payroll (2026)
Employee classification in trucking companies is two questions: whether OTR drivers and local drivers are employees or contractors, and whether the employees are exempt from overtime. BEG runs trucking company payroll for $45 per employee per month inside the payroll software you already use, all-inclusive, live in 3 to 5 business days.
Employee or contractor: how trucking companies get it wrong
Whether a driver is an employee or an independent contractor under the FLSA turns on the economic reality test in 29 CFR part 795, which weighs six factors including control, investment and permanence; receiving a 1099 or signing a contractor agreement does not by itself make a worker a contractor. The Department announced a proposed rule to revise this test on February 26, 2026 (91 FR 9932).
The motor carrier overtime exemption does not cover dispatchers, office personnel, workers who only unload vehicles, or loaders who are not responsible for proper loading; these employees are not exempt under Section 13(b)(1).
Exempt or non-exempt
Section 13(b)(1) of the FLSA provides an overtime exemption for employees of motor carriers and motor private carriers who work as drivers, driver's helpers, loaders or mechanics and whose duties affect the safety of operation of motor vehicles in interstate or foreign commerce.
The salary floor for the executive, administrative and professional exemptions is $684 a week, restored to the 2019 level after the 2024 rule was vacated. Heavy and tractor-trailer truck drivers at the May 2025 national median of $58,640 a year clear that salary test, so the duties test decides.
What misclassification costs
Employers must withhold and deposit income, Social Security and Medicare taxes on wages paid to employee drivers and pay the employer share plus unemployment tax; generally no taxes are withheld or paid on payments to independent contractors.
Reclassifying a contractor as an employee means back FICA at 15.3 percent split between the parties, back FUTA, penalties and interest, and often back overtime under the FLSA at time and one half for two or three years.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- Whether a driver is an employee or an independent contractor under the FLSA turns on the economic reality test in 29 CFR part 795, which weighs six factors including control, investment and permanence; receiving a 1099 or signing a contractor agreement does not by itself make a worker a contractor. The Department announced a proposed rule to revise this test on February 26, 2026 (91 FR 9932). [DOL Fact Sheet #13]
- The motor carrier overtime exemption does not cover dispatchers, office personnel, workers who only unload vehicles, or loaders who are not responsible for proper loading; these employees are not exempt under Section 13(b)(1). [DOL Fact Sheet #19]
- Section 13(b)(1) of the FLSA provides an overtime exemption for employees of motor carriers and motor private carriers who work as drivers, driver's helpers, loaders or mechanics and whose duties affect the safety of operation of motor vehicles in interstate or foreign commerce. [DOL Fact Sheet #19]
- Employers must withhold and deposit income, Social Security and Medicare taxes on wages paid to employee drivers and pay the employer share plus unemployment tax; generally no taxes are withheld or paid on payments to independent contractors. [IRS: Independent contractor (self-employed) or employee?]
Read the full guide to the employee versus contractor test, and the rest of the trucking company payroll library.
Managed Payroll, Handled.
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Frequently Asked Questions
Are OTR drivers in a trucking company employees or contractors?
Whether a driver is an employee or an independent contractor under the FLSA turns on the economic reality test in 29 CFR part 795, which weighs six factors including control, investment and permanence; receiving a 1099 or signing a contractor agreement does not by itself make a worker a contractor. The Department announced a proposed rule to revise this test on February 26, 2026 (91 FR 9932).
What does the second test look at?
The motor carrier overtime exemption does not cover dispatchers, office personnel, workers who only unload vehicles, or loaders who are not responsible for proper loading; these employees are not exempt under Section 13(b)(1).
Which trucking company employees can be exempt from overtime?
Section 13(b)(1) of the FLSA provides an overtime exemption for employees of motor carriers and motor private carriers who work as drivers, driver's helpers, loaders or mechanics and whose duties affect the safety of operation of motor vehicles in interstate or foreign commerce.
What does managed payroll cost for a trucking company?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Per-diem pay for drivers, owner-operator vs W-2 classification and DOT compliance are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Trucking & Transportation Companies. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: IRS: Independent Contractor or Employee
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