How to Hire Drivers for my TCP License (“Charter Permit”)
It is important to first understand who is legally allowed to operate a vehicle that is sanctioned by the TCP license. A TCP license is issued by the California Public Utilities Commission (“CPUC”), it is a license that is meant to regulate companies that plan to transport passengers.
In order to operate a vehicle that is sanctioned by the TCP license, the driver must be either:
1) the company owner
2) an official w-2 employee of the company
1099 Contractors are not allowed to operate TCP sanctioned vehicles
Depending on your business entity, there are different requirements:
Limited Liability Company
Any Managing Member of the company can operate a vehicle that is sanctioned by the TCP license, BusinessRocket suggests to allocate at least 5% of the company to each Managing Member that will operate a vehicle.
Any shareholder or Officer of the company holding at least 15 percent (15%) of the issued or outstanding stock of a corporation qualifies an individual to operate a vehicle.
Either partner in a General Partnership contract is entitled to operate a vehicle sanctioned by the TCP
The Sole owner of the organization can only operate the vehicle sanctioned by the TCP License
An Official w-2 Employee of the company
Regardless of your business structure, if you have official w-2 employees with workers compensation insurance, you are allowed to designate them as drivers.
Why are 1099 Contractors not allowed?
The TCP license is issued to your company, the nature of a 1099 contractor is that you are outsourcing the work to another organization or individual. You are only allowed to 1099 contract out to other organizations that have a TCP License. 1099 contractors are not considered employees or owners, by nature a 1099 contractor is a 3rd party entity, and thus it needs its own license to be able to drive passengers.
Only owners of the organization or official w-2 employees with a workers compensation insurance policy can operate a TCP sanctioned vehicle. To avoid the requirements and costs associated with having official employees, some TCP Operators negotiate with their prospect drivers to become part owners of the underlying company. Please be careful with such strategies because if your contracts and agreements are not properly communicated to the driver, they can be entitled to employee benefits.
BusinessRocket specializes in helping TCP operators with such structures, we do recommend you consult with an attorney to ensure you are making the right decision. Once you determine how you would like to proceed, BusinessRocket can help structure the organization for you correctly and affordably, Visit our TCP onboarding page for more information or call 310-424-5558 Extension 1 to speak with one of our expert TCP agents.
Apply for a TCP
The first step to operating your own fleet!
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