Court records reveal extent of truck rental program abuse

WASHINGTON — A study of public records filed in court cases alleging abuse by drivers participating in truck hire-purchase programs with carriers estimates the extent of predatory leasing in the industry is approaching 6 percent of all CDL holders.

Such rampant abuse by carriers is making the industry less safe, causing qualified drivers to leave the profession, while drivers locked into such contracts could be more likely to be less safe on the road, according to the Group truck leasing task of the Federal Motor Carrier Safety Administration (TLTF).

“There are many weeks when drivers (in lease-purchase programs) earn very little or nothing at all,” said task force member Steve Viscelli, a research sociologist at the University of Pennsylvania, speaking at a group meeting Wednesday. “We can imagine some of the stress that’s putting on people and the decisions they’re going to make around safety.”

Litigation data compiled by the TLTF and the Consumer Financial Protection Bureau, a federal agency that supports the group’s work, reveals more than 200,000 drivers out of 3.5 million CDL holders are potentially involved in for-hire trucking — “probably the tip of the iceberg. of drivers actually affected,” Viscelli said.

Viscelli’s role on the TLTF’s public court data subcommittee, which presented its findings to the full committee on Wednesday, was to look at driver experiences and how drivers enter into hire-purchase agreements, the consequences in terms of trajectory their career and economic impact. .

“Only a few drivers out of the thousands who appeared to participate in these hire-purchase programs successfully completed them, suggesting that turnover rates are extraordinarily high and the likelihood of success extraordinarily low,” he said.

“Even when drivers successfully completed them, the available evidence suggests that they were actually working for significantly less pay than they would as a comparable employee.”

Examining the lawsuits’ data, Viscelli and the subcommittee found that the lease-purchase agreements were structured so that drivers were sometimes far more productive than the average productivity for a fleet.

“They were working harder, working more days and earning less than they would even as an intern at some of these companies, after meeting those rental costs and obligations for fuel, insurance and other expenses,” he said . “So the owner-operators in these agreements have given these trucking companies a huge competitive advantage in terms of labor costs while, quite frankly, they’ve been making headway.”

The TLTF, which was authorized as part of the bipartisan infrastructure bill in 2021, was created by the FMCSA to investigate and evaluate – and possibly regulate – truck hire-purchase contracts. The panel was tasked, among other things, with determining whether the agreements act as a deterrent to safe operations, including non-compliance with hours of duty regulations.

“Rent-buying itself is not necessarily what we are 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 task force colleague Joshua Krause runs a truck leasing company.

“The problem is when the entity leasing the truck is the same entity that has an exclusive transportation agreement with the driver, that can put drivers in a cycle of indebtedness to the carrier where they feel they have no choice.”

The task force highlighted one case where a carrier estimated that only 5%-10% of its lease-purchase drivers successfully completed their leases, and of those who did not, about half had ended up being indebted to the company.

TLTF formalizes specific recommendations to bring to FMCSA, including that the agency consider prohibiting motor carriers from offering truck hire-purchase arrangements to independent operators/drivers who are also required to be exclusive drivers for carrier.

In addition to banning such arrangements, the task force is considering a recommendation that FMCSA provide new rules or statutes that provide restitution and easier avenues of recourse for affected drivers to provide more accountability in the industry, as well as add more FMCSA oversight enforcement responsibility.

Click for more FreightWaves articles by John Gallagher.

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