- 4 -
company clients were paying substantial amounts to obtain such
insurance. Generally, the premium rates for workers’ compensa-
tion insurance on truck drivers were significantly higher than
premium rates for most other occupations. As a result, workers’
compensation insurance was a major expense for trucking compa-
nies. In soliciting a trucking company’s business, TLC’s sales
representatives explained that TLC was able to obtain workers’
compensation insurance in the private market at comparatively low
premium rates because of the large number of driver-employees on
whom it obtained such insurance.
When TLC was successful in attracting a trucking company as
a client, TLC and that trucking company entered into a contract
entitled “TLC Exclusive Lease Agreement” (exclusive lease agree-
ment), which set forth the agreement between them with respect to
the leasing by such trucking company of driver-employees from
TLC.6 When each trucking company entered into an exclusive lease
agreement with TLC, such trucking company terminated the employ-
ment arrangement that it previously had with all of its truck
drivers.
6Each exclusive lease agreement was a standard TLC form
contract. There were no agreements between TLC and any trucking
company client regarding TLC’s leasing driver-employees to such
trucking company client other than the agreement set forth in the
exclusive lease agreement. The material provisions of each
exclusive lease agreement remained unchanged throughout the
taxable years at issue except for the factor (discussed below)
used to compute the lease fee that each trucking company client
owed TLC.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011