Article

Commentary: Is Your Lease-Purchase Program a Problem?

August 2017, TruckingInfo.com - Editorial

by Deborah Lockridge, Editor-in-Chief - Also by this author

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Deborah Lockridge
Deborah Lockridge

“Forced into debt. Worked past exhaustion. Left with nothing.”

That’s the subhead of a USA Today report, “Rigged,” which earlier this summer highlighted abuses of leased owner-operator drivers at the Ports of Los Angeles and Long Beach.

The newspaper found that some drivers were working long hours and taking home very little – in some cases none – of their paychecks after their lease payments and other expenses were deducted.

The report claimed that in some cases drivers were being forced to work as much as 20 hours in a day, far past the maximum allowed by law, with drivers alleging that their supervisors threatened to take their jobs or assign lower-paying routes as punishment if they did not.

The Harbor Trucking Association told HDT that the cases in the USA Today report were cherry-picked for their extremeness or were not completely explained.

“It focuses on a very small subset of the industry, and what we forget to point out is the 90-plus percent of drivers who prefer to be independent contractors and have made that business model work,” said HTA Executive Director Weston LaBar in an e-mail.

And that’s long been my complaint about “misclassification” crusades by the Teamsters (especially at the ports), by state agencies, and by the U.S. Department of Labor. In an effort to address abuses like those described in the USA Today report (and to collect employment taxes government agencies think they’re missing out on), these efforts throw the baby out with the bathwater, making it much harder for carriers and drivers to maintain legitimate contractor relationships.

Nevertheless, there are plenty of horror stories out there about owner-operator lease-purchase programs, and not just at the ports. Over the years, I’ve heard complaints about these programs at carriers both large and small. If you offer a lease-purchase program to help drivers become owner-operators, take advantage of the publicity over the USA Today report to instigate a review of your program — not only as written, but also how it’s being operated in real life and how it’s perceived by drivers.

I have no doubt that some of the port companies meant well, trying to give drivers a way to get trucks complying with the stringent port emissions regulations when there was no way they could afford to buy a new truck on their own. But as they say, the devil is in the details, unintended consequences, and all that.

A good place to start for a checkup would be to consider these common complaints received by the Owner-Operator Independent Drivers Association about lease-purchase programs:

  • Truck needs constant repairs
  • Never receive a paycheck
  • Miles have been cut
  • No paycheck and getting further behind
  • Returned the truck to go back to working as a company driver, but the carrier is still charging payments on the truck
  • Company requires a separate maintenance (escrow) account, but driver never gets to use it when the truck needs repairs

Is any of this happening at your fleet? Review your owner-operator settlements. If they’re taking home a pittance after all the deductions, chances are you’ve got problems. Talk to your contractors. Conduct an anonymous survey of your lease-purchase drivers in case any are reluctant to talk because they fear retribution.

Even though driver turnover is low right now, getting and keeping drivers is still top of mind at most carriers I talk to.  Drivers who are stuck in the type of situation described in the USA Today article or have the problems outlined by OOIDA are not going to be the kind of safe, happy, productive drivers you want in your fleet.  If you find problems, fix them, and let drivers know what you’re doing to improve.

Comments

  1. 1. Jason [ November 17, 2017 @ 05:23AM ]

    I've been thru 2 leases,one with central freightlines and other with celadon,bankrupt on both,if you don't buy your loads or kiss alot of butt you don't have a chance.ill stay a company driver now

 

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