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Percentage drivers: what they need to know

July 14, 2015
Misunderstandings arise when a trucker's pay is dependent on a linehaul rate

I came across an interesting discussion the other day on social media about the responsibilities of a trucking company when it pays lease operators or company drivers a percentage of linehaul.

The post began with a trucking company owner who'd been having a discussion with one of her company drivers to whom she pays a percentage of the load. The trucker wanted to see the rate confirmation of the loads he hauled to make sure he was being paid the correct amount based on the percentage he was contracted to receive. The owner was questioning whether the company driver had the right to see the paperwork that included the rate the shipper was paying on the freight.

This is what I found interesting: Since the carrier only had employee drivers, the owner had no idea whether Part 376 (Lease and Interchange of Vehicles ¤ 376.12) of the FMCSA regulations pertained to the relationship with an employee driver paid on percentage. In theory, this regulation pertains to drivers operating under a carrierÕs hauling authority through a lease agreement.

For reference, here is paragraph (g) of Part 376.12 that relates to copies of the freight bill or other form of freight documentation:

(g) When a lessor's revenue is based on a percentage of the gross revenue for a shipment, the lease must specify that the authorized carrier will give the lessor, before or at the time of settlement, a copy of the rated freight bill or a computer-generated document containing the same information or, in the case of contract carriers, any other form of documentation actually used for a shipment containing the same information that would appear on a rated freight bill. When a computer-generated document is provided, the lease will permit lessor to view, during normal business hours, a copy of any actual document underlying the computer-generated document. Regardless of the method of compensation, the lease must permit lessor to examine copies of the carrier's tariff or, in the case of contract carriers, other documents from which rates and charges are computed, provided that where rates and charges are computed from a contract of a contract carrier, only those portions of the contract containing the same information that would appear on a rated freight bill need be disclosed. The authorized carrier may delete the names of shippers and consignees shown on the freight bill or other form of documentation.

This particular area of the Motor Carrier Regulations strictly pertains to the contractual agreement between a motor carrier and a trucker who is leasing his/her equipment onto the carrier to haul the freight of the carrier's customers. Nowhere in the regulation does it mention anything about an employee driver paid on percentage. So the question remains as to whether an employee trucker paid a percentage of linehaul has the right to see rate documentation on the loads he hauls.

The search for this answer proved far more difficult than I imagined, as there is no legal precedence in a Labor Relations Board hearing or in any court case I could locate.

What's the answer?

I'm not an attorney, so my answer isn't to be considered legal advice or direction on this issue. But let me step back into the shoes I wore when I first started trucking. I was an employee driver hauling household goods for a small moving agent. I was paid a percentage of each shipment. Each check I received from the agent included a copy of the rated Bill of Lading (BOL). At the time, I was green and not familiar with the regulations covering how I was to be paid; it seemed to me that the agent was doing the right thing by providing the rated BOL with my check and statement.
As I continued in my trucking career, I became a lease operator and every agent I was contracted to followed the same procedure, supplying the rated BOL with each statement and check.

My best answer to those trucking companies that have employees who are paid on a percentage of the linehaul is that it makes common sense to provide documentation showing the total from which driver percentage pay is derived. If the situation was reversed, what type of documentation would you require so that you knew you were being paid fairly?
This should be considered part of your driver retention policy. In today's stiff competition for drivers, it costs between $8,000 and $15,000 to find, train and get a new trucker into a positive cash flowÑif you can find one in the first place. In this example, that could be the cost to replace a disgruntled driver who thought he was being treated unfairly because he wasnÕt permitted to see the rate from which his percentage pay was derived.

There's nothing worse for your reputation than to have an unhappy trucker telling other drivers' especially through social mediaÑhow badly he felt he was treated. And all over a misunderstanding that is easily resolved.

Remember, the regulation permits the carrier to redact any information that would be considered confidential and proprietary to the business and not related to the hauling rate.

Keeping qualified truckers is an ongoing challenge. When it comes to money, the best policy is always full disclosure and honesty. And doing the right thing to preserve a quality employee/employer relationship is priceless

About the Author

Tim Brady

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