California Owner-Operator Trucking Workers' Comp: The 25% and 60% Payroll Rule

When a California trucking company pays drivers who own or furnish their own vehicles, the WCIRB's driver payroll rule sets a floor under reportable payroll: at least 25% of the total paid for heavy rigs and their crews, or at least 60% of the total paid for light vehicles and their drivers when no accountable plan reimburses vehicle use. The rule is Part 3, Section V, Rule 4 of the Uniform Statistical Reporting Plan, effective September 1, 2026. It applies to drivers who are employees for workers' comp, so whether a driver is an employee at all is a separate question that comes first.

What Rule 4 says

Rule 4 defines drivers and their helpers as employees whose principal duties are performed in connection with the operation of motor vehicles.

Heavy vehicles. When drivers own or furnish vehicles such as log trucks, tractor/trailer rigs, furniture vans and bobtail trucks with a gross vehicle weight rating of 10,000 pounds or more, and pay the operating expenses, no less than 25% of the total amount paid for the hire of the vehicles and their operating crews is deemed to be the payroll of the drivers and their helpers.

Light vehicles. When drivers own or furnish vehicles such as motorcycles, passenger cars, vans, pickup trucks, SUVs and minivans with a gross vehicle weight rating under 10,000 pounds, pay the operating expenses, and are not reimbursed for business use under an accountable plan, no less than 60% of the total amount paid for the hire of the vehicles and drivers is deemed to be payroll.

Weight rating. Gross vehicle weight rating is the manufacturer's loaded weight rating for a single vehicle. If a vehicle has no plate or marker, one with fewer than six wheels is treated as under 10,000 pounds and one with six or more wheels is treated as 10,000 pounds or more.

Accountable plan. An accountable plan reimburses an employee for business use of a vehicle based on actual business miles driven, or on actual receipts for vehicle expenses together with mileage records that document business and personal use. Reimbursements under an accountable plan cannot exceed the IRS standard business mileage rate unless they are fully supported by receipts.

A floor, not a fixed share

Both percentages are written as "no less than," so each works as a minimum. At audit, you want contracts and payment records that show what was paid for the vehicle, what was paid for the driver, and who bears the operating expenses. A bundled per-load payment with no breakdown leaves the auditor to apply the minimum.

Two worked examples

These are illustrations at advisory pure premium rates, not quotes. They show manual premium before assessments, schedule credits and debits.

Heavy rigs. A fleet pays $400,000 during the policy period for owner-operated tractor/trailer rigs and their drivers, and the drivers pay their own operating expenses. Rule 4 deems at least $100,000 of that to be payroll. At the 2026 advisory rate of $7.318 per $100 for class 7219(1), manual premium on that payroll is $7,318. At a 1.30 mod it is $9,513.40.

Light vehicles. A delivery company pays $250,000 to drivers who use their own vans, pay the operating expenses and receive no accountable-plan reimbursement. Rule 4 deems at least $150,000 to be payroll. At the 2026 advisory rate of $10.620 per $100 for class 7198(1), manual premium on that payroll is $15,930. If the same drivers were reimbursed under an accountable plan, the 60% minimum in this rule would not apply, and the carrier would tell you how the payroll is measured instead. The two classes are explained in our 7219(1) vs 7198(1) guide.

Is the driver an employee at all?

Rule 4 matters only if the driver is an employee. California applies the ABC test in Labor Code section 2775. For purposes of the Labor Code and the Unemployment Insurance Code, a person providing labor or services for pay is an employee unless the hiring entity shows all three conditions: the person is free from the hiring entity's control and direction, performs work outside the usual course of the hiring entity's business, and is customarily engaged in an independently established trade, occupation or business.

A carrier's drivers do work inside the carrier's usual course of business, which is why the second condition is hard for a trucking company to meet. Statutory exemptions and the facts of a particular arrangement can change the analysis, so have counsel review any contractor model. For the broader trucking picture, see our trucking workers' comp guide.

Outside California

Other states set their own driver and owner-operator rules. NCCI states use their own classification and payroll rules, and Texas lets employers opt out of the system entirely, as covered in our guide to Texas non-subscriber vs. workers' comp. Confirm the governing bureau's rules before applying anything above to a non-California account.

Records that protect the account

• A written lease or contract for every owner-operator that states who pays the operating expenses.

• Separate records of what was paid for the vehicle and what was paid for the driver, where the contract splits them.

• Registration or the manufacturer's plate showing each vehicle's gross vehicle weight rating.

• Mileage logs, receipts and written plan terms if drivers are reimbursed under an accountable plan.

• Current certificates of insurance for any contractor who is genuinely independent.

• Driver rosters and payment registers that match the payroll reported to the carrier.

Document the arrangement as it actually operates. Do not restructure pay only to reduce reportable payroll, because auditors look at the real relationship, and a mismatch between paper and practice is what turns an estimate into a dispute. Our audit disputes handbook covers how those disputes run.

Frequently Asked Questions

What is California's driver payroll rule for owner-operators?

It is Part 3, Section V, Rule 4 of the WCIRB's Uniform Statistical Reporting Plan. For drivers who own or furnish heavy vehicles and pay operating expenses, at least 25% of the total paid for the hire of the vehicles and crews is deemed payroll. For light vehicles without an accountable plan, the minimum is 60%.

What counts as a heavy vehicle under the rule?

A vehicle with a gross vehicle weight rating of 10,000 pounds or more, such as a log truck, tractor/trailer rig, furniture van or bobtail truck. With no plate or marker, a vehicle with six or more wheels is treated as 10,000 pounds or more.

What is an accountable plan?

A method of reimbursing an employee for business use of a vehicle based on actual business miles, or on actual receipts and mileage records that document business and personal use. Reimbursements generally cannot exceed the IRS standard mileage rate unless fully supported by receipts.

Does California's ABC test apply to trucking owner-operators?

California applies the ABC test in Labor Code section 2775 for purposes of the Labor Code and Unemployment Insurance Code. The second condition, work outside the hiring entity's usual course of business, is difficult for a carrier that uses drivers to perform its core service. Counsel should review specific arrangements and any exemptions.

Can I lower the payroll exposure from owner-operators?

Document the arrangement accurately: written contracts, separate vehicle and driver payments, vehicle weight ratings, accountable-plan records for light vehicles, and certificates for genuinely independent contractors. Accurate records support the classification and payroll you report. Restructuring pay only to reduce payroll invites a dispute.

Running owner-operators in California and facing a high mod or a non-renewal? Tell us the operation and the model through Will We Write It and we will answer within one business day. Send it to proposals@cprbrokers.com or call 714-928-3858 (office 704-256-5945).