It does not always make economic sense for retail outlets to buy or lease trucks and pay drivers for occasional deliveries. Major national shipping companies, including FedEx, often hire independent delivery contractors for their on-demand pickup and ground delivery services. When a company makes a deal with an independent contractor, it typically does not have to pay federal payroll taxes, Social Security taxes, federal unemployment insurance tax, state unemployment insurance premiums, and workers’ compensation insurance premiums. It also is excused from most employee benefits, such as health insurance, vacation time, sick leave, retirement benefits, and life or disability insurance.
In addition, the contractor has to provide the truck, the office, and a telephone. Furthermore, the company can hire a contractor for a short period of time or for a special project without worrying about capital expenditures. The job descriptions of independent delivery contractor are as follows:
- Deliver packages, supplies, small appliances, and other items on demand for local retailers.
- Pick up and deliver packages and boxes as an independent representative of a national or regional carrier.
- Rent, lease, or purchase an appropriate vehicle.
Spend time with an accountant or consultant to go over your business plan to ensure that you can be economically successful as an independent contractor. The margin for error is slim. Study the contracts offered by major carriers and make sure they will work for your situation. For example, FedEx’s published rules for independent contractors dictate that drivers can have no more than three moving violations within the previous three years and no more than one in the previous 12 months. Drivers must have a commercial driver’s license with a hazardous materials endorsement and must pass a U.S. Department of Transportation–defined physical exam and drug test.