Published on April 20, 2020, updated on October 22, 2025
There’s always a lot riding on how you structure your business, especially in an industry as regulated and complex as transportation. Have you obtained a motor carrier license under federal transportation law? Are your freight broker agreements compliant? Do you work with owner-operators, and if so, are your contracts aligned with Truth in Leasing regulations (49 CFR Part 376) and Department of Labor standards for classifying workers?
These may sound like simple questions, but the answers can have major legal and financial implications. Between transportation compliance requirements, insurance obligations, contractual agreements, and driver qualifications, managing your business model demands precision. Add the persistent risk of worker misclassification and ensuring each driver is correctly classified as an independent contractor or employee, and it becomes clear that getting compliance right from the start is critical to protecting your business.
Thankfully, finding a clear path through these compliance challenges begins with one key question: What’s your model?
The trucking industry includes a wide range of participants—from truck drivers and freight brokers to last-mile couriers and rideshare operators. Each model introduces unique compliance and legal considerations that determine how a company engages, pays, and manages contractors. Understanding these transportation compliance frameworks helps trucking companies avoid misclassification, minimize risk, and operate confidently under federal employment tax and labor standards act (FLSA) regulations.
In a Company Independent Contractor (IC) model, a company contracts directly with ICs to provide transportation services. This structure is common in app-based platforms like ride share or delivery services. Drivers usually use personal vehicles under 10,000 pounds, which typically exempts them from federal motor carrier licensing, though state and local compliance rules may still apply.
While this model offers flexibility, it also requires careful documentation to ensure transportation compliance and to confirm that workers are classified as independent contractors under Department of Labor guidance. Missteps here can lead to being misclassified as an independent contractor, which can trigger audits from the Wage and Hour Division and potential back payment of income taxes or lost benefits and protections.
Under this structure, federally licensed motor carriers partner with ICs or owner-operators who operate their own vehicles under the carrier’s DOT and MC authority. These agreements must comply with Truth in Leasing regulations to ensure fairness and legal integrity.
Because both the carrier and contractor are engaged in the business of transportation, maintaining clear contractual boundaries and active occupational accident insurance coverage is essential. These safeguards strengthen compliance, ensure workers are correctly classified, and protect against misclassified worker claims.
Still, without clear boundaries, the relationship between carrier and contractor can blur, raising the risk of independent contractor misclassification. This is where occupational accident insurance, strong documentation, and compliance audits become essential tools for protection and to help classify workers accurately under Department of Labor guidance.
The Broker Carrier model provides one of the clearest paths to maintaining strong transportation compliance. Here, brokers arrange shipments while carriers perform the actual transportation, with each holding their own licenses and insurance.
This model aligns closely with federal transportation law and offers a potential defense against misclassification under the ABC test, especially the “B” prong, since brokers and carriers operate in distinct lines of business. To ensure compliance, companies should partner with a transportation insurance agent to verify all coverage, including occupational accident and liability insurance, as well as compliance with federal employment tax obligations.
When adopting a broker carrier model, it’s important to review all company policies with a knowledgeable transportation insurance agent. Properly aligning your insurance and verifying independent contractor status ensures coverage remains valid and compliant with your structure.
Worker misclassification can lead to audits, lawsuits, and significant financial exposure. Most independent contractor misclassification claims stem from payment disputes or injuries on the job. Ensuring accurate pay practices, transparent deductions, and timely settlements can greatly reduce complaints.
Injury-related claims often arise when contractors lack coverage. Requiring ICs to carry occupational accident insurance or a workers’ compensation equivalent policy protects both the contractor and the contracting company. Comprehensive coverage not only reduces liability but also strengthens your overall contractor compliance framework while ensuring workers as independent contractors retain access to benefits and protections such as health insurance and fair treatment under labor standards act (FLSA) rules.
Among all transportation industry structures, the broker carrier model provides the most defensible approach for maintaining compliance. Distinct operational boundaries between brokers and carriers help satisfy federal transportation compliance standards and reduce the likelihood of independent contractors being misclassified.
Best practices include:
Using standardized broker carrier agreements
Partnering only with licensed business entities (LLCs, corporations)
Maintaining proper motor carrier licensing and DOT authority
Keeping updated insurance documentation and broker records
Verifying occupational accident insurance coverage
Working within this framework—and supported by compliance experts like Openforce, gives trucking companies a stronger foundation to remain compliant, ensure every contractor is correctly classified, and reduce the risk of costly worker misclassification cases.
Delivery and Logistics Models at a Glance
| Model Type | Business Type | Contract Type | Contracting To | Weight Class | License Requirement |
|---|---|---|---|---|---|
| Company–IC | Company | IC agreement | Independent Contractor (IC) | Usually under 26K lbs | No federal MC/DOT if using Company MC |
| Carrier–IC | Carrier | IC agreement | Independent Contractor (IC) | Usually under 26K lbs | No federal MC/DOT if using Company MC |
| Carrier–Owner–Operator | Carrier | Owner–operator agreement | Owner–operator | Any weight class | MC and DOT required; specific lease requirements & charge-back rules apply |
| Broker–Carrier | Broker | Broker–carrier agreement | Carrier | Any weight class | Usually MC/DOT if 10K+ lbs; MC only if 26K+ lbs |
| Broker–IC | Broker | IC agreement | Independent Contractor (IC) | Usually under 26K lbs | No federal MC/DOT required |
Compliance is critical to the success and longevity of any transportation company. From managing independent contractors to maintaining proper licensing and insurance, transportation compliance ensures that businesses operate legally, safely, and efficiently. Noncompliance can result in costly fines, disrupted operations, and increased risks of independent contractor compliance, all of which can threaten profitability and reputation.
That’s why leading companies turn to Openforce, the trusted independent contractor management platform built for transportation compliance. Openforce’s self-service system automates onboarding, document collection, insurance verification, and settlement processing, reducing the risk of manual errors and ensuring every driver meets federal and state requirements. Through built-in automation, contracting companies can monitor compliance in real time, standardize contractor agreements, and maintain accurate audit trails-all from one centralized platform.
Want to learn more about how Openforce helps support compliance in the transportation industry?