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Company Administration

14 Jun

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Per Diem – More Than Good “Cents” For Your Business?

June 14, 2010 | By |

This month’s President’s Blog is courtesy of our good friends at Superior Trucking Payroll Service.  To learn more about the services that Superior offers, please visit their website at www.truckingpayroll.com or call them at 866-296-5911.

Per Diem is a way you can save your company thousands of dollars a year while at the same time put more money in your drivers’ paychecks.

Once you understand the “why’s & how’s,” it’s a simple process to implement.  Let’s start with an explanation of paying per diem.  It is really just a matter of modifying your payroll process by a couple of simple steps.  First, you calculate the gross wage by multiplying the rate you pay by the miles run.  Next, subtract out the per diem you plan to pay.  Use this new amount to calculate the tax withholdings before adding back the per diem.  For example, let’s compare two drivers driving 2,500 miles at 34 cents per mile but only one is paid per diem:

Per Diem?

No

 

Yes

Gross Pay (rate x miles)

      850.00

 

  850.00

Less Per Diem

               

 

 (190.00)

Taxable Gross Pay

      850.00

 

  660.00

FICA

       (65.03)

 

   (50.49)

Fed W/H

       (79.35)

 

   (55.85)

MI W/H

       (34.38)

 

   (26.12)

Net Pay

      671.25

 

  527.54

Plus Per Diem

               

 

  190.00

Total to Driver

      671.25

 

  717.54

 

You’re probably wondering about the savings.  By paying per diem, your company will save money on workers’ compensation insurance.  The reason is because the per diem portion of the wage is not included in the workers’ compensation premium calculation.  Netting out the per diem reduces payroll, which reduces your workers’ compensation premium.  The IRS allows up to $59.00 per day in per diem.  If your workers’ compensation rate is 8%, you could reduce your premium by $4.72 per driver per day.  Annually that’s $1,180 per driver.  Here is how I calculated  it:

$59.00 per diem x 8% W.C. Insurance = $4.72 savings per driver per day.

$4.72 x 5 days per week x 50 weeks per year = $1,180.00 per driver annually.

Imagine the savings if you have ten drivers, twenty drivers, or one hundred drivers!

It is important to note that your insurance company may have a cap on the amount of per diem they allow and there are rules that govern when you can use per diem and how much you can use.  Navigator can help you with the first question and we can help you with the second.

As for the drivers seeing more in their paychecks… it all comes down to the fact that the per diem is non-taxable.  At the maximum IRS per diem allowance, your driver who is on the road 250 days per year will take home $14,750 each year – tax free! 

There are a few other things I want to point out.  First, only 80% of per diem may be deducted on the company’s income taxes.  However, you will find that the reduction in FICA tax you pay (as per diem is not subject to FICA) usually offsets the extra income tax.  Second, if one of your drivers has a lost time workers’ compensation claim, the indemnity benefit paid to them (wage replacement) is based upon their wage (which is now lower because per diem is not included in their wage).  Third, on the rare occasion that one of your drivers is currently deducting the per diem on their income taxes, they will no longer be able to do so.  However, most drivers are agreeable to points two and three since they are bringing home a larger paycheck each pay period.   

Could you use some help implementing the use of per diem?  Do you have questions regarding trucking payroll administration?  Superior Trucking Payroll Service works with trucking companies of all sizes.  If you have one truck or a thousand trucks, please contact us.  Trucking is all we do and we would love to help you out.  You can email me directly at mritzema@truckingpayroll.com or call 866-296-5911 and ask for Mike.

Thanks Jeff for sharing your Blog this month.  I owe you one!

 

17 May

By

Tips for Driver Recruitment

May 17, 2010 | By |

Recently a colleague of mine pointed out that in reviewing the help wanted ads in the local Sunday paper, he estimated a 400% increase in the number of advertisements seeking qualified CDL-A drivers.  As freight levels increase, have you begun planning how to locate experienced, quality drivers? 

 

This month I thought I would spend some time outlining a few places to consider checking when you are looking to fill your vacant drivers’ seats. 

 

Current Drivers:  Often your best hires will come to you at the recommendation of your top employees.  To increase the potential for word of mouth recruitment, you may even offer a small bonus to any employee who recommends a driver who is successfully hired. 

 

Local and Regional Newspapers: The help-wanted section of your local or regional newspaper is still a great way to advertise for new drivers.  This is especially true when you are in need of drivers to dispatch from your out-of-town terminals or to service your shippers who are located in another city.  And, in many cases, newspaper advertisements come with an online job posting as well, expanding your reach to include individuals who may be considering relocating to the area in which you are hiring. 

 

State Unemployment and Job Placement Services:  Many states offer job placement services to assist employees and employers to find one another.  In the state of Michigan you can go to www.MichWorks.org to access an online database of current job seekers.  This website will even allow you to set up automatic email alerts to notify you when new resumes are posted with match your job description.

 

Company Website:  If your company has its own website, you might consider adding an Employment or Careers tab.  This allows potential drivers to learn more about your company, while also reviewing an applying for any current openings you may have.

 

Employment Websites:  Websites such as www.Monster.com, www.CraigsList.org and www.CareerBuilder.com all offer access to a large bank of potential employees and have job posting services.

 

Industry Associations:  Some industry associations offer members access to employment or job boards.  To check, visit the association’s website or call their office. 

 

Industry Publications:  Consider running an ad in an industry magazine.  You may first want to check with your drivers to see what they are reading to make certain your advertisement will reach your intended audience. 

 

Driver recruitment is just one area where we can help you locate answers.  Do you have an area you could use some assistance in? We’d love to help you out.  Give us a call today at (800) 596-TRUCK (8782).  At the Navigator Truck Insurance Agency we work hard at being accessible, helpful and result oriented.  

 

Until next month,

 

Jeffery A. Moss, ARM

President

 

 

 

15 Apr

By

Driver Incentives: Reward Employees without Breaking the Bank

April 15, 2010 | By |

According to an article published by the FMCSA, up to 80% of driver turnover is related to “churning,” which is described as drivers leaving their current positions in order to find work someplace they will feel more valued.  Perhaps the most obvious way in which to demonstrate how much you value your drivers is through their paycheck.  However, in today’s economic climate it can be difficult, if not impossible, to make wide sweeping pay increases.  Instead, this month I’d like to focus on just a few steps that can demonstrate your appreciation for your employees’ hard work, without breaking the budget you’ve spent the last year working so hard to get under control.

1.)     Create a Team Environment – Consider creating a council or ad hoc advisory committee that is made up of “top drivers,” defined by whatever criteria you feel is most appropriate.  Becoming a part of the council not only provides your drivers something to aspire to, but once there, it will continue to make them feel valued.  The benefit to you is that you can use the knowledge and experience of your top drivers to help you to continue to improve current operations and plan for the future of your business.  Meetings can be held via conference call while drivers are waiting to load or unload. 

2.)     Recognize Good Work When You See It – Sounds pretty simple, but just acknowledging good work when you see it can go a long way to making your employees feel appreciated.  Create and present to the driver certificates that recognize areas where he has had success (on time deliveries, DOT roadside inspections, helping out a team member, accident free miles, and so forth.)  Consider announcing who has received which certificates to the rest of your staff.  Doing so will demonstrate to the rest of your drivers that you are working hard to acknowledge and reward good work and may, in turn, motivate the rest of your group to do better.  Consider requesting input from shippers and receivers, too.  Ask them to let you know if your drivers are doing a good job, so that you can in turn commend them for having done so. 

3.)      Consider Low Cost Bonuses – Obviously all drivers appreciate the financial acknowledgement of work done well.  If a large check isn’t an option for you right now, but you do have a little “extra” to play with, consider lower cost gifts as a method by which to reward your employees.  For example, gift cards to restaurants the driver frequents while on the road or when home with his family, a store or website where he can purchase something for a hobby (such as hunting), or just a credit card type gift card that he can use anywhere he wishes.  Alternatives to a gift card might include company apparel (such as sweatshirts, jackets and so forth), company sponsored seminars (such as a financial class or marriage retreat), a donation to the driver’s favorite charity or a paid day off.

4.)     Have a Party – Consider hosting a company sponsored picnic, dinner or outing for the drivers and their families in appreciation of their hard work.  Remember that if you choose to make available or serve alcohol, you will have an additional liability exposure.  As such, it is recommended that you first consult with your insurance agent to verify that your General Liability policy coverages and limits are adequate.

5.)     Consult Your Insurance Agent and Insurance Company Safety Representative – While companies with large fleets may be in regular contact with their insurance company’s safety representative, in most cases the same programs, benefits and tools are available to all clients.  It doesn’t matter if you have one employee or one hundred.  Together, your insurance agent and safety rep can help you create the driver incentive program that best fits your company’s objectives and budget.  In addition, many insurance companies have a “driver recognition program” where drivers receive certificates, hat pins, plaques and so forth for meeting safe driving criteria.

 Could you use some help in finding ways to reward your drivers for all they do for you?  Give us a call today at (800) 596-TRUCK (8782).  We at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented and welcome the opportunity to help you honor your drivers.  

Until next month,

 

Jeffery A. Moss, ARM

President