Guess What: Transparency Applies to Leased Owner-Operators Too!

UPDATE: Class Action Suit Filed on this issue.

With all the hoopla the past few months over broker transparency, the issue of motor carrier transparency has slipped by the wayside.

Back in May 2020, I mentioned the Truth-in-Leasing regulations in this article. Now that the FMCSA dockets are fully briefed with comments-- all three broker transparency-related dockets, and we await rulings by FMCSA, I thought maybe it is time for us to examine the transparency obligations motor carriers have toward leased owner-operators...

Much like we were focused since last Spring on 49 CFR 371.3, this time, I direct your attention to 49 CFR § 376.11 - General leasing requirements and 49 CFR § 376.12 - Lease requirements. It is the latter of these two that we need to zoom in on...

First, take a look at this:

(d) Compensation to be specified. The amount to be paid by the authorized carrier for equipment and driver's services shall be clearly stated on the face of the lease or in an addendum which is attached to the lease. Such lease or addendum shall be delivered to the lessor prior to the commencement of any trip in the service of the authorized carrier. An authorized representative of the lessor may accept these documents. The amount to be paid may be expressed as a percentage of gross revenue, a flat rate per mile, a variable rate depending on the direction traveled or the type of commodity transported, or by any other method of compensation mutually agreed upon by the parties to the lease. The compensation stated on the lease or in the attached addendum may apply to equipment and driver's services either separately or as a combined amount (emphasis added).

Next, see:

(g) Copies of freight bill or other form of freight documentation. 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, 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. 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 (emphasis added).

So, if you're an owner-operator leased on to a carrier and you're paid on the basis of a percentage of the gross revenue of a shipment, then guess what.... your "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, 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." If the carrier doesn't give it to you, you have the right to request same.

But, don't forget that very important last part...

"Regardless of the method of compensation, the lease must permit lessor to examine copies of... 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."

As I read it, that means, you could ask to see the broker-carrier contract, subject to reasonable redaction. that should tell you what the broker is paying the carrier and then you can do the math because you already know what the carrier is paying YOU! Turns out, not only do carriers (currently, at least) have the right to know what the shipper is paying the broker (currently, upon request), but transparency trickles down under the regulations to leased owner-operators.

I hope that helps you understand your rights with respect to your relationship with your carrier, Owner-Operators. Questions? Email: [email protected].

If you like this article, then you really should join the SBTC at www.truckers.com.

--James