Question:
We were told by our carrier that they would not let us lease our cars to our driver's without adding their (the driver's) name to the title of the car? Any info on how to do that? How does one remove, if need be, that additional name in the future? Any advice (besides look for another carrier)? They say that the reason is that, although drivers have occupational coverage, that they (the carrier) would be open to lawsuit if awork comp claim arose??? Doesn't make sense to me...is this act me I have to make them a "partner" as in corporation?

Answer:

Well lets see. You are leasing a car to a driver right? You must add the driver's name to at least the registration. The title (pink slip) would have the party/ies name who own the vehicle. This wold include who ever holds the priM loan, the bank, and perhaps a third party.
You have a real sticky can of worms, from the way the question is stated you are:
1. Buying a car.
2. Leasing on to a carrier as an O/O.
&
3. Sub-leasing out to a driver.
What a mess. No wonder the carrier you are leasing on to put the problem back in your lap.
I'ld definately call an attorney and get legal advise. The contract between you and the driver who leases the car is going to be tricky and if you're not careful you could loose your loans and be in violation of the contract you signed with the bank to acquire the loans on the cars.
Keep the faith.
M
The regulations posted are from cites with the most current available on-line regulations to my knowledge. Due to the FMCSR being updated from time-to-time, the poster accepts no responsibility for the content of the regulations and it is ultimately the readers responsibility to verify the current regulations. The views posted are my own and in no way represent the US DOT or FMCSA.

Answer:

I need more information. What is it that you are trying to accomplish? If you are actually trying to make them true independent contractors, then you may just want to lease the car to them, take a partial assignment of the settlement proceeds for the payment, and then leave everything alone.
If you are trying to make it appear that they are independent contractors, without true independence, in order to avoid work comp., withholding, etc., then there is no advice I can give you that would withstand close scrutiny by the government.
If it is really an employment relationship that you have with the drivers, then all the paperwork in the world cannot hide that fact.
Please tell me more.

Answer:

Dear M & Opie,
Thanks for replying...yes, we are trying to make them true independent contractors by leasing them the cars and taking a partial assignment like you said and all of the legal requirements have been met,Opie BUT the carrier we are leased onto doesn't want to take the risk that they see as a possibility due to the fact that occupational insurance policies the drivers would have has a million dollar cap on it and work comp has an unlimited amount. So, you see, they said if I had the driver's name on the title that it would protect them, the carrier, if ever there was a lawsuit that arose. Can the drivers get their own work comp policies on themselves?? M, what would adding the name to the registration do? What would be the likelihood of getting the drivers names added to the title? What would be the repercussions there tax wise, possession wise, etc? Any ideas? How could I "lose my loans and be in violation of the contract I signed with the bank" like you stated?? Help guys, my drivers really want this to fly and I want to keep them happy and the business going forward...there must be a way???

Answer:

When you signed the contract for the loan with the bank, the vehicle was the colaterial. The bank gave you a loan based on their assessment of the risk you presented as a loan holder.
The title is a legal document issued by your state indicating the owner of the vehicle, your current title has your bank as the owner and you as the registered owner. Check with your bank for a copy of the title to help you picture what is being discussed.
I suspect your bank will have to approve change of registered owner as the vehicle is your colaterial for the loans. Any change in the title could cause the bank problems in the event vehicle has to be repossesed. The loan is tied to the title and your signature is the banks guarantee you will pay your payments on time and if not then the bank is authorized to sell the vehicle for any outstanding debt.
I would check with Connie the Insurance Lady on the Insurance Forum. I believe people can get their own workmans comp. However I would be prepared for sticker shock as I believe the insurance is pricy. You may want to check into group rates depending on the number of drivers you have as there are usually discounts associated with volumn.
I know of carriers who lease their vehicles to drivers. I'ld call the Mid-West carers Association or a similar association in your area or the OOIDA for some additional information.
I'ld also call the bank where the vehicle loans are to see if they may assist you.
Keep the faith.
M
The regulations posted are from cites with the most current available on-line regulations to my knowledge. Due to the FMCSR being updated from time-to-time, the poster accepts no responsibility for the content of the regulations and it is ultimately the readers responsibility to verify the current regulations. The views posted are my own and in no way represent the US DOT or FMCSA.

Answer:

THE BETTER HALF SAID: "yes, we are trying to make them true independent contractors by leasing them the cars and taking a partial assignment"
OPIE SAYS: Then you must treat them like independent contractors. In this respect "the Duck Test" will give you insight. If it quacks like a duck and waddles like a duck, it's a duck. Ergo, if it looks like an employer/employee relationship then it is an employee/employer relationship not matter what you call it.
It is my opinion that the assignment must be complete conditioned only upon the driver making payments (through assignment or otherwise) and properly maintaining the equipment.
You must let them be free to let them do their jobs without interference.
THE BETTER HALF SAID: "BUT the carrier we are leased onto doesn't want to take the risk that they see as a possibility due to the fact that occupational insurance policies the drivers would have has a million dollar cap on it and work comp has an unlimited amount."
OPIE SAYS: They are entitled to put this restriction on but I see no purpose. If they take a direct lease from the drivers (not you) then it would be no different relationship from any other o/o.
THE BETTER HALF SAID: "So, you see, they said if I had the driver's name on the title that it would protect them, the carrier, if ever there was a lawsuit that arose."
OPIE SAYS: You could do that, however if they ever turned the car in you would have to work to get their names off the title. I also fail to understand what putting their names on the titles with you accomplishes other than put you in a quasi-partnership with them which may expose you to risk. Under that scenario you would not be leasing the car to them it probably still would not pass the duck test.
THE BETTER HALF ASKED: "Can the drivers get their own work comp policies on themselves??"
OPIE SAYS: Yes, but they would be independent contractors and might not be covered under the policy. I suppose the drivers could form corporation. You could then lease the cars to their corporations, obtain personal guarantees of the lease payments, and then the drivers could make themselves employees of their corporations. They could then provide you and the motor carrier with proof of workers compensation insurance.
THE BETTER HALF ASKED: "Any ideas?"
OPIE SAYS: Lease them the car outright, take an assignment of the settlement for a fixed or variable payment amount.
Or, sell them the car, collect the sales tax, and finance them into it. You would be named as an additional secured party behind the existing bank or finance company. You would have to check the loan documents to see if this is permitted.
THIS ADVICE IS OF A GENERAL NATURE BASED UPON LIMITED FACTS PRESENTED. NOTHING IN THIS POST SHALL BE CONSTRUED AS CREATING AN ATTORNEY-CLIENT RELATIONSHIP.

Answer:

OPIE SAYS: Yes, but they would be independent contractors and might not be covered under the policy. I suppose the drivers could form corporation. You could then lease the cars to their corporations, obtain personal guarantees of the lease payments, and then the drivers could make themselves employees of their corporations. They could then provide you and the motor carrier with proof of workers compensation insurance
The Better Half: I was told by my ins. agent and Connie the Insur. Lady, that they COULD get a work comp. policy on themselves. Why do you say that they might not be covered under such a policy??
Thanks for your help...