WASHINGTON — A new panel set up to advise federal regulators is looking into limiting — or eliminating — the ability of a trucking company to wield financial power over a driver through truck lease-purchasing agreements.
The recommendation, still in draft form, was one of the discussion points Tuesday during the first meeting of the Federal Motor Carrier Safety Administration’s Truck Leasing Task Force (TLTF).
One of the first orders of business was defining two types of leasing arrangements between carriers and owner-operators — truck equipment leases and leases in which the owner-operator leases on to a carrier’s operating authority — and the effects they can have when the equipment lease held by the carrier becomes predatory.
“We see many examples of carriers that control the income of the driver and will see that the driver is coming closer to completing their lease … and then somehow the loads start to dry up,” said Cullen Law Firm founder Paul Cullen, one of nine TLTF panel members.
“The driver all of a sudden can’t make his truck payments and therefore defaults on the lease-purchase part of the agreement. The driver loses all the equity that they thought they were building up in the truck, and the carrier finds the next person to take advantage of.”
Because a successful ending to a lease-purchase program is so rare, Cullen said, he suggested that motor carriers should not be able to own the debt of the driver “and should not have that additional financial power to control the driver.”
Task force member Jim Jefferson, who supervises regulatory compliance for the Owner-Operator Independent Drivers Association, agreed that when a carrier controls both the lease-purchase agreement and the operating authority of the driver, “they have total control over that guy that’s supposed to be an independent contractor, who basically ends up being a glorified employee,” he said.
“They treat him like an employee, but they give him all the responsibilities of an independent contractor, and in a lot of cases they make less money than what a company driver can make. So maybe there should be some separation between a lease-purchase company and a carrier so that that company doesn’t control every aspect of the [relationship] with the driver.”
The TLTF was created through the Bipartisan Infrastructure Law, and its initial two-year charter was signed in 2022. It is tasked with examining financing arrangements among motor carriers, entry-level drivers, driver training providers and others that may result in new drivers entering the trucking workforce “encumbered by outsized debt and inequitable terms for repayment,” according to the charter.
“We consistently hear about the challenges drivers face … and the distraction of unfair truck leasing agreements that really affect a driver’s day to day,” FMCSA Administrator Robin Hutcheson said in opening the meeting.
“We hear stories of drivers who signed truck leasing agreements to become their own boss, to reach their potential, and we hear stories of high-mileage trucks not offering test drives, presented with unclear agreements, and ineffective service contracts. This ultimately places drivers in situations where they may not be able to realize their full potential.”
The Consumer Financial Protection Bureau (CFPB), an independent government agency, was “integrally involved” in standing up the committee, an FMCSA official noted at the meeting. A CFPB official told the panel that information on truck lease purchase agreements discussed at task force meetings will be critical to a CFPB inquiry launched last year into practices and financial products that leave employees indebted to their employers.
While the panel’s primary focus is to examine and address illegal and predatory leasing practices, Joshua Krause, chief operating officer at OTR Leasing, warned of the potential for unintended consequences of overly stringent rule changes, particularly those that might limit the ability of carriers to respond to changes in market demand.
“If the impacts of what we’re talking about reduce the amount of carrier-backed leases that provide carriers with the opportunity to have a variable cost structure, the carriers will … have to compensate accordingly,” Krause said. “That elasticity of demand and the carriers will be negatively impacted.”
In addition to the those cited above, TLTF members include:
- Tamara Brock, Brock Logistics/Lewis & Lewis Logistics (independent owner-operator).
- Troy Hawkins, TTOH Consulting & Logistics (independent owner-operator).
- Kaitlyn Long, Teamsters union (labor).
- Steve Rush, Carbon Express Inc. (carrier).
- Lesley Tse, Getman, Sweeney & Dunn (attorney).
- Steve Viscelli, University of Pennsylvania (educator).
Butch Crenshaw
✅ TRUTH Victor 100% ✅
Butch Crenshaw
✅Basically ALL the Megas have these PREDATORY Lease purchase programs that scam you for dirt rates and pay for THEIR equipment in the process.
KLLM is a real Clownshow paying their Fake OOs $1-1.50/mile where you can never make enough profit to get ahead of the debt💰🤡💰
Victor
First off, how many people sign these lease-purchase agreements without reading them or having a lawyer read them?
Second, isn’t the carrier holding the title of a lease-purchase truck kind of like the old company stores decades ago? You owe your soul to the company store….
Third, if you can’t save up for a down payment, finance a truck through a bank or other regulated institution that wants you to succeed and buy a truck that way, then perhaps you’re not ready or cut out to be an owner/operator.
Fred
Stay away from South St. Paul Kenworth Dealership, if you’re a Minority!!
Fred
I’m glad to hear this, but it want me in my situation with a South Paul Minnesota Kenworth Dealership and their leasing company. I have had three major/Big breakdown within two years my lease. I’m also thinking of filling bankruptcy, to protect my family, my credit score 789.
Is their anyone, who could help?
Travis
An IBT executive on this advisory panel? Talk about the fox guarding the henhouse…
David
Same thing with Warren transport out of Waterloo Iowa which is own by Ats an also owns Ces where I lease my truck from
Charles Harris
I’m glad there cracking down on these bad truck lessors people stay away from it if you can’t get your own authority don’t it even right now brokers are still ripping off people with there own authority