HR and payroll for transport and logistics in the United States
Reviewed by Mellow Editorial Team, HR & payroll content team
Running payroll and HR for a US transport and logistics business means layering federal Department of Transportation rules on top of standard employment law — and getting either wrong creates serious liability. Here is what employers in the sector need to know.
Worker classification is your first decision
Transport and logistics companies typically use a mix of employees and independent contractors. That distinction drives almost every subsequent compliance obligation.
Employees are subject to FICA withholding (Social Security at 6.2% up to the annual wage base, Medicare at 1.45% with no cap), federal income tax withholding via Form W-4, and employer matching of Social Security and Medicare contributions. You report their annual wages on Form W-2, due to employees and the SSA by January 31.
Contractors — owner-operators who own their truck, for example — receive a Form 1099-NEC if you pay them $600 or more in a calendar year. You withhold nothing and pay no employer FICA on their earnings.
The problem is misclassification. The IRS, the Department of Labor and many state agencies each apply their own test. California is the hardest state in which to classify a driver as an independent contractor; it uses the ABC test, which presumes workers are employees unless you can prove otherwise on all three prongs. Several other states have adopted similar tests. Always get a classification analysis before you onboard a fleet of "contractors."
Hours, overtime and the FLSA motor-carrier exemption
Most US employees are covered by the Fair Labor Standards Act, which requires overtime pay at one-and-a-half times the regular rate for hours above 40 in a workweek. Drivers and other transport workers subject to DOT hours-of-service regulations may qualify for the Motor Carrier Act exemption from FLSA overtime — but the exemption is narrower than many employers assume.
It applies only to employees who: work for a carrier subject to DOT jurisdiction; and whose duties affect the safety of operation of vehicles with a gross vehicle weight rating above a certain threshold. Small-vehicle drivers (under that threshold, including many last-mile delivery staff) are not exempt and must receive standard FLSA overtime. If you assume an exemption applies without checking, you are exposed to back-pay claims and penalties.
Even exempt drivers are still covered by DOT hours-of-service rules, which set daily and weekly drive-time limits and mandatory rest periods. Violating those is a separate DOT enforcement issue.
DOT compliance as an HR function
For employers with commercial motor vehicle operations, DOT requirements are not just operational — they land squarely in HR's lap.
Driver qualification files. Federal Motor Carrier Safety Administration (FMCSA) regulations require you to maintain a qualification file for every commercial driver: employment application, motor vehicle record check, road test certificate or equivalent, annual MVR review, and medical examiner's certificate. Files must be kept for the duration of employment plus three years.
Drug and alcohol testing. FMCSA mandates pre-employment drug testing, random testing (at federally set minimum annual rates), post-accident testing, and return-to-duty testing. You need a written policy, a designated employer representative, a consortium or third-party administrator if you run a small fleet, and records retained for up to five years depending on the test type.
CDL verification. If a role requires a Commercial Driver's License, verify the license class and any endorsements before the first day of work, and check the FMCSA Drug and Alcohol Clearinghouse — a federal database you are required to query before hiring CDL drivers and annually thereafter.
Payroll complexity: multiple states and wage rules
Long-haul operations cross state lines, which creates payroll headaches. Most states use some form of apportionment for income tax withholding on drivers who work in multiple states, but the rules differ. Some states require withholding from day one; others have a threshold of days worked before withholding obligations trigger. You need to track where each driver actually works, not just where they are domiciled.
A few states — Texas, Florida and Washington among them — have no state income tax, which simplifies things for drivers based there. But if those drivers regularly cross into states that do have income tax, withholding obligations in those states may still apply.
Pay frequency rules also vary by state. Some states mandate weekly or biweekly pay for certain categories of worker. Check the rules for every state where you have employees, not just your headquarters state.
For more on managing payroll obligations across multiple jurisdictions, see how Mellow runs payroll across six countries on one platform.
At-will employment and sector-specific considerations
US employment is generally at-will, meaning either party can end the employment relationship at any time for any lawful reason. That gives transport and logistics employers flexibility to respond quickly when a driver loses their CDL or fails a drug test — a practical necessity given the safety stakes.
Non-compete clauses deserve attention. California prohibits most non-compete agreements, which affects any driver or dispatcher based there. Other states enforce them to varying degrees. In transport, non-solicitation clauses protecting customer relationships are usually more defensible than broad geographic restrictions on where a driver can work.
Keep a separate termination checklist for safety-sensitive roles: document the reason, process the final paycheck within your state's required timeline, update the FMCSA Clearinghouse if the separation relates to a drug or alcohol violation, and retain all driver qualification records for the required period.
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