WASHINGTON — A study of public data filed in court cases alleging abuse of drivers participating in truck lease-purchase programs with carriers estimates that the extent of predatory lease contracts in the industry approaches 6% of all CDL holders.
Such rampant abuse by carriers makes the industry less safe by causing qualified drivers to leave the profession, while drivers stuck in such contracts may be more likely to be less safe on the road, according to the Federal Motor Carrier Safety Administration’s Truck Leasing Task Force (TLTF).
“There are many weeks when drivers [in lease-purchase programs] earn very little or no pay at all,” said task force member Steve Viscelli, a research sociologist at the University of Pennsylvania, speaking at a group meeting on Wednesday. “We can imagine some of the stress that puts on people and decisions they’re going to make with regard to safety.”
Litigation data compiled by the TLTF and the Consumer Financial Protection Bureau, a federal agency supporting the group’s work, reveals over 200,000 drivers out of 3.5 million CDL holders who potentially are involved in predatory truck leases – “probably the tip of the iceberg of the number of drivers actually affected,” Viscelli said.
Viscelli’s role on TLTF’s Public Courts Data Subcommittee, which presented its results to the full committee on Wednesday, was to look at driver experiences and how drivers were getting into lease-purchase agreements, the consequences in terms of their career trajectory, and the economic impacts.
“Just a handful of drivers out of thousands that appeared to participate in these lease-purchase programs actually completed them successfully, suggesting that the turnover rates are extraordinarily high and the likelihood of success extraordinarily low,” he said.
“Even when drivers completed them successfully, the available evidence suggests that they were actually working for significantly less pay than they would have as a comparable employee.”
By examining court-case data, Viscelli and the subcommittee found that lease-purchase contracts were structured such that drivers at times were far more productive than the average productivity for a fleet.
“They were working harder, working more days and were earning less than they would have as even a trainee at some of these companies, after meeting those lease costs and obligations for fuel, insurance and other expenses,” he said. “So owner-operators in these agreements were providing these trucking companies a tremendous competitive advantage in terms of labor costs, while frankly working their butts off.”
The TLTF, which was authorized as part of the Bipartisan Infrastructure Bill in 2021, was created by FMCSA to investigate and assess – and potentially regulate – truck lease-purchase agreements. The group was tasked, among other things, with determining if the agreements act as a disincentive to safe operations, including noncompliance with hours-of-service regulations.
“Lease-purchase in and of itself is not necessarily what we’re trying to stop; there are legitimate programs out there,” said TLTF member Kaitlyn Long, director of economics for the Teamsters Union. Long pointed out at the meeting that fellow task force member Joshua Krause runs a truck leasing company.
“The problem is when the entity leasing the truck is the same entity that has an exclusive carrier agreement with the driver, which can lead drivers into a cycle of indebtedness with the carrier where they feel they don’t have any options.”
The task force highlighted a case in which a carrier estimated that only 5%-10% of its lease-purchase drivers successfully completed their leases, and of those who didn’t roughly half ended up being indebted to the company.
The TLTF is formalizing specific recommendations to bring before the FMCSA, including that the agency consider banning motor carriers from offering truck lease-purchase arrangements to independent operators/drivers who are also required to be exclusive drivers for the carrier.
Outside of banning such arrangements, the task force is considering a recommendation that FMCSA provide new rules or statutes that offer restitution and easier avenues for recourse for affected drivers to provide more accountability in the industry, as well as add more enforcement responsibility to FMCSA oversight.
Related articles:
Truck drivers: FMCSA wants to see your leasing agreement
Is $69,000 a year enough for driving a truck?
Truckers push FMCSA to make brokers pay for detention time
Click for more FreightWaves articles by John Gallagher.
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