Loaded and Rolling: Team drivers eligible for compensation under FLSA

December Class 8 preliminary orders fall; LMI December data shows capacity up, prices falling faster

Thomas Wasson

10 months ago

Team drivers eligible for compensation under FLSA

In December, a federal appeals court ruled that company team drivers’ time spent in sleeper berths after eight hours can be compensated under the Fair Labor Standards Act. The case involved a former CRST trainee who sued CRST in 2016 alleging that the team-based driver training program violated the FLSA based on the carrier’s compensation policy. The court noted that CRST calculates team pay based on the total number of dispatched miles, with pay rates corresponding to driver experience.

The U.S. Court of Appeals for the 1st Circuit believes sleeper berth pay should be included for company team drivers. Matt Cole with the Commercial Carrier Journal writes that CRST “does not count time spent in the sleeper berth as hours worked and so does not include the sleeper berth hours in the calculation of the drivers’ hourly wage. If the sleeper berth time is counted as hours worked, however, CRST’s drivers receive an hourly wage that falls short of the minimum wage under the FLSA.”

This development could have implications for truckload carriers that use teams for expedited freight. While the Federal Motor Carrier Safety Administration and Department of Transportation regulate the number of hours worked, the FLSA under the Department of Labor handles compensation and has separate regulations. Currently, motor carriers are exempt from paying overtime under the FLSA, but the unique situation of team driving, in which one driver is sleeping while the other is on duty, created additional questions on whether that sleeper berth time was benefiting the driver or the company. The court noted solo drivers are able to stop at a rest location and have greater access to basic living essentials compared to team drivers who cannot leave while the truck is in motion.

December Class 8 preliminary orders fall

ACT Research’s preliminary December Class 8 order data, released Wednesday, saw net orders fall to 26,500 units, a loss of 15,000 units compared to November.

“After a strong and upside-surprising November, Class 8 orders surprised in the opposite direction in 2023’s last report,” said Kenny Vieth, ACT president and senior analyst. “With the largest seasonal factor of the year, seasonal adjustment pushes December’s intake sharply lower, to 20,900 units. The full-year 2023 Class 8 order tally fell 7.0% y/y to 278,500 units.”

This comes as new Class 8 deliveries have fallen over the past four months, with ACT Research noting that private fleet buying continues to fuel pent-up demand. Used truck prices continue to decline but at a slower pace. FreightWaves’ Alan Adler notes that according to J.D. Power’s December Guidelines newsletter, 4-to-6-year-old trucks sold for 3.9% less than in October and 40.2% less than in November 2022. In the first 11 months of the year, late-model sleepers sold for 41.6% less than in the same period of 2022. Monthly depreciation in 2023 has dropped to 4%.

Market update: LMI December data shows capacity up, prices falling faster

December data released by the Logistics Managers’ Index (LMI) saw transportation capacity continuing to expand, which caused transportation prices to fall. A LMI index reading above 50 indicates expansion while a reading below signals contraction among respondents. Transportation capacity for December was up 1.5 points month over month to 63.3 points, contributing to prices declining 1.1 points m/m to 43.1 points. Lower fuel prices and surcharges were cited as one reason for the declines.

Inventory levels saw a similar pace of decline to November, registering at 44.3 as retailers revert to just-in-time inventory strategies. FreightWaves’ Todd Maiden writes of the report, “Downstream respondents returned a neutral response for inventory levels one year from now, but those upstream said they would be growing stockpiles over that time (56.2), which the report said was ‘the clearest sign yet that retailers are looking to get back to JIT and get off the inventory roller coaster they have been riding over the last few years.’”

Regarding a 2024 outlook, the report notes that while the U.S. macroeconomic situation is better than 2023, consumers remain somewhat pessimistic about the economy, with some dubbing it a “vibe-cession.” That is to say, “consumers feel the economy is in bad shape despite positive numbers (and in many cases a positive personal situation).”

FreightWaves SONAR spotlight: Holiday spot rate jump more like a bump

Summary: The predicted spot rate jump resembles a mild bump as spot rate expectations moderate moving toward February, according to data from the FreightWaves National Truckload Index Forecast (NTIF). The FreightWaves NTIF 28-Day Outlook predicted on Dec. 5 that spot rates would be at $2.59 per mile all-in compared to the current NTI seven-day moving average of $2.43 per mile. The earlier forecasts for December expected a larger spot rate improvement, impacted by fuel and seasonality. However, excess truckload capacity and downward pressure on diesel prices from a warmer-than-average December blunted the rise.

New revisions for the next 30 days, according to the NTIF, updated daily, show spot rates peaking at $2.57 per mile on Sunday before declining 27 cents to $2.30 per mile on Saturday. When looking at the NTIF data sets, keep in mind the NTIF will predict daily the spot rate for the next 30 days, while the NTIF28 is a historical snapshot of what the NTIF predicted 28 days ago.

Spot market linehaul rates (NTIL) continue to climb as carriers resume operations and drivers return to work. Linehaul rates less fuel (DTS.USA/6.5mpg) climbed 12 cents per mile from $1.69 on Dec. 25 to $1.81 per mile. While spot rates are rising, if seasonal trends continue, spot market linehaul rates will gradually decline following the first week of January as freight volumes sag and competition for fewer available spot market loads drives down prices.