Understanding Driver Contract Agreements: Elements and Best Practices

What is an driver contract agreement?

A driver agreement contract is a document utilized by a company to set forth the terms and conditions of the relationship between the employer and the individual(s) who will be driving company vehicles. It is designed to define the obligations and expectations of both parties, and to create uniformity and clarity with respect to the benefits, and responsibilities, which will be bestowed upon the driver by the employer .
This document is ultimately designed to be a mechanism for clarifying the rights and obligations of both the employer and the employee, and to reduce possible conflict when an employment relationship is in its early stage.

Essential Terms in Driver Contracts

While every contract is unique, some terms may be found in most or all driver agreement contracts, regardless of their structure. These include:
Payment Terms
This is often one of the most important considerations for drivers. While many carriers still pay drivers on a per-mile basis, others have moved towards hourly pay or even pay-per-shipment.
When pay is based on cents-per-mile, the contract should detail whether these mileage standards are based on the odometer, practical miles, or the relevant grid from the carrier’s base terminal to the delivery point. It should also address whether this pay-per-mile figure accounts for the full amount of loaded and empty miles driven or just loaded miles.
All payments should be itemized. The driver should receive a record showing all deductions (if any) and explaining the terminology used. Further, tax withholdings from the driver’s pay should match the information filed with the IRS.
Work Hours
A driver contract should specify work days and hours. It must also detail overnight stays, including whether the driver will need to find his or her own accommodations on longer hauls, whether there will be opportunities to return home frequently, and whether the company will pay for housing or meals.
Driver companies must comply with federal hours-of-service requirements as well as any additional hours the two parties might agree to. For example, if they agree to 12-hour workdays, the driver may not work more than that number of hours unless the company contacts him or her first. It’s possible to exceed the hours in an emergency and even in those cases, the company should have a procedure for allowing the driver to request permission to work beyond the hours on the contract.
Vehicle Maintenance
The maintenance clause of the contract should address whether the carrier is responsible for maintenance and, if so, how often. If they will maintain the equipment, which repairs must the drivers cover? The contract should also explain whether the carrier will pay the driver for required maintenance such as tire changes (even if this happens during a low mile week) or and whether they will provide maintenance equipment. For example, with tire changes, a company truck might have an emergency tire kit.
If the carrier expects the driver to maintain the equipment, the provisions should address what happens it it requires repairs that cannot wait until the next maintenance cycle. For example, if the rear end blows out and the driver must replace it, will they receive reimbursement?
Termination Conditions
The contract must explain how the two parties may terminate the agreement. For example, the carrier may terminate the contract if they have not received any shipments or routes for a stated period of time or if the driver refuses to deliver a route after accepting it. Conversely, a driver may terminate the contract if he or she is away from home for more than a set number of days for a shipment or if the carrier does not have any routes available for a stated period of time.
Termination conditions should be clear about how much notice the driver must give when he or she ends the contract early. If the driver violates a specific part of the contract such as the hourly work or pay clause, the contract should address the circumstances under which they might face legal or contract action.

Considerations with Driver/Independent Contractor Contracts

Before committing to a driver contract, whether as a driver or a business, it is important to understand the legal considerations involved in such an agreement. Proper drafting and review by a lawyer is imperative to ensure compliance with all relevant federal and state laws.
Firstly, it is crucial to determine whether the driver will be an independent contractor or an employee of the business. Drivers – particularly when they are engaged through what is referred to as "rider-hailing" – have been the subject of many recent legal claims. A complaint has been filed against Uber in the U.S. District Court of the Northern District of California, with a secondary claim filed in the U.S. District Court of the Central District of California alleging that drivers were misclassified as independent contractors and were wrongly denied employment benefits and protections. The court in the first case has certified a class for all legal claims brought, and the second case is currently pending. In addition to alleged misclassification, riders of the service have also brought claims alleging breach and unconscionable terms, and violations of various California Labor Code sections as well as California’s Unfair Competition Act. As courts continue to address these class action claims, adjudications of the drivers’ status and the potentially inappropriate clauses in the agreements will make significant determinations. The NLRB (National Labor Relations Board) has also brought claims against some of these companies, such as Uber, attempting to enforce the rights of drivers and holding that a company’s nondisclosure and confidentiality agreements with its drivers could violate Section 8(a)(1) of the National Labor Relations Act.
Additionally, the Federal Motor Carrier Safety Administration carries its own driver agreements. Individuals must have a valid commercial driver’s license and medical certification and should ensure that the terms contained in the commercial driver’s contract meet the standards set forth by the FMSCA.

Common Driver Contract Pitfalls

There are several common pitfalls that transportation companies face when creating driver agreement contracts. A few of the most frequent oversight include:

• The lack of a non-compete agreement. A common stipulation in driver agreement contracts is that drivers cannot drive for a competitor during their tenure, and even sometimes for a specified period of time after leaving the company’s employment. A non-compete agreement can protect client, driver, and business trade secrets, and prevent a company from being undermined by its own ex-employees.
• Using the same contract for all of your drivers. The best driver agreement contracts are tailored to each hiring situation. Companies should have driver agreement contracts designed for their independent contractors and their employees. There may also be differences in contracts for dedicated truck drivers as opposed to lease purchase agreements or those drivers with a CDL. It takes time, but having a lawyer create specific agreements for each particular situation will keep you from needing another lawyer to fix mistakes down the road.
• A lack of clarity in contract terms. The more precisely the terms of a contract are written, the less likely it is to be misinterpreted or followed by the violating party . Imbedding as much detail as possible in the contract will keep everyone on the same page and free from misunderstanding; for example, advising drivers of exactly how long they have to arrive at work, how far they have to travel to get there and whether they have to sign in upon entering the building or simply wait until they are dispatched to sign in as a driver.
• Leaving sections like the non-compete agreement vague. The stronger the contract, the less chance there is of it being violated. If your company wishes to impose a non-compete clause, it should specify the exact time frame as well as the exact distance that the company deems acceptable for departing drivers to continue to work. Otherwise, it might be difficult to prove a violation in between the lines of an ambiguous agreement.
• Not including a clause that allows you to terminate the contract if the other party violates any of the specific terms.
• Leaving administrative and payment terms up in the air if the contract is terminated, an issue that could cause a dispute that passes the legal standards required for trial.

Many of the above pitfalls can be avoided by hiring a lawyer experienced in transportation law. An attorney can assist you in drafting contracts that fit your needs and structure them in a way that keeps you protected and in business for the long-haul.

Negotiating the Driver Contract

Negotiating driver contracts can be a complex process, but there are some strategies that can help ensure both parties feel satisfied with the terms. One key to successful negotiation is open and honest communication about expectations and needs. Asking questions and discussing goals can help identify the most important issues and establish a cooperative atmosphere.
It is also important to be flexible during negotiations. Both parties should be willing to adapt their positions and make compromises in order to reach an agreement that works for everyone. Being amenable can help build good will and trust that can facilitate a smooth negotiation process.
In addition, it is often useful to put proposals in writing, to avoid misunderstandings and create a clear record of the discussion. This written record can be referred to in the event of a dispute down the line. Another good practice is to conduct a full review of the proposed terms, to make sure that the agreement is fair and properly articulated. Seeking legal help can be useful at this stage, to make sure that all of the necessary elements are present and that each party’s rights and responsibilities are protected.
Ultimately, a successful driver contract involves give and take. Both parties should be able to walk away from the negotiation with a sense of confidence that their interests have been adequately addressed, and that the outcome is favorable.

Updating and Renewing Driver Contracts

Just as it is essential to have individual driver agreements in place, it is also imperative to periodically review such agreements to ensure that they are still valid and compliant with applicable laws. A periodic review can also be a good way to determine if there are any areas of the contract that could be improved upon or addressed differently. For example, perhaps the agreement does not refer to certain deductions that are now contemplated by the employer’s policies. With respect to renewing a contract, unless the contract expressly precludes it, the employer can renew the contract for another defined (yet not indefinite) term or permanently extend the term of the contract. An employer can also elect to amend the contract even if it is not about to expire. It should also obtain a signed acknowledgment from the driver that he or she has renewed and/or amended the contract, though an acknowledgment is not strictly required . If a contract is being extended or renewed, but the terms of employment remain the same, this may be done without a second consideration. A company has the option of including a provision in its standard driver agreement requiring that, in the event that the term of the driver agreement has expired, the terms will be automatically extended until a new contract has been entered into, unless otherwise terminated in accordance with its terms. Such automatic renewal provisions offer the benefit of eliminating potential gaps in an employment term and thereby reducing the risk that the driver will use the lapse in the contract to argue that an employer had terminated him or her because of dissatisfaction with the driver (for example, frequent calls to dispatch to complain about pay). The standard practice would not be to consider the new contract a continuation of the old contract unless the terms are the same.