How Safety Audits Apply to New Owner-Operators

If you decide to get your own DOT number and strike out on your own, one regulatory requirement you will need to be aware of is the “new-entrant safety audit.”

This is an in-depth audit conducted by the Federal Motor Carrier Safety Administration. It involves examining six areas of the new carrier’s safety compliance and practices. It is normally conducted within the new carrier’s first 18 months of operation. As the investigator will want to see some established records and processes, normally the safety audit will not be done until the carrier has been in operation for at least six months.

A safety audit involves the examination of six “factors” to determine the new carrier’s compliance with the safety regulations. The key is documentation. You may do all the required steps to comply with the regulations, but if it is not documented, it will appear that you are not.

During the safety audit, the safety investigator will be looking for two types of violations. These are:

• Acute violations. These violations are severe enough that the presence of a single violation requires immediate corrective action by the carrier.
• Critical violations. These violations are proof of a pattern of poor safety management controls. Critical violations will not affect the compliance review rating until they reach a level of ten percent non-compliance.

Regulatory guidance provided in the safety regulations will assist the safety investigator with deciding whether a particular violation is acute or critical.

Factor 1, General

Factor 1 will involve a review of the new carrier’s compliance with the “general requirements,” including the financial responsibility (insurance), accident register (a list of all DOT-recordable accidents the new carrier has been involved in and a file containing the accident report for each accident on the list), and false documents and statements.

Factor 2, Drivers

Factor 2 reviews the new carrier’s compliance with the driver regulations in two key areas, driver qualifications and drug and alcohol testing. Just a warning: Owner-operators are required to fulfill the requirements of both the “employer/carrier” and the driver when those terms are used anywhere in the regulations.

The auditor will be checking the new carrier’s “driver qualifications files” (even if there is only one driver) to make sure the driver has completed a DOT driver application, completed entry-level driver training (if required), taken a road test (or has the equivalent on file), one driver’s license issued by their home state with the correct classes and endorsements, a valid medical card on file, had driving record and past employment checked when hired, had annual MVR checks, and reported all traffic convictions, suspensions, revocations, and disqualifications.

The auditor will also review the new carrier’s drug and alcohol program. Because this is a fairly complex area, many owner-operators hire a “third-party administrator” to manage this for them. Also, if the new carrier has only one driver, the driver will need to be placed into a “consortium.” A consortium is a “random pool” made up of drivers from various companies. However, even if the carrier “farms out” this area, the carrier’s records — including test results and contracts with the third-party administrator and consortium — will be checked.

Factor 3, Operational

During the review of Factor 3, the investigator will examine the new carrier’s compliance with the rules of safe operation and the hours-of-service regulations. The auditor will verify that the drivers are operating the vehicles safely and in compliance with the hours-of-service regulations.

During this portion of the review the investigator will ask for “supporting documents” to compare to the drivers’ logs to locate false logs. Supporting documents are any documents kept in the course of business that can prove or disprove the accuracy of drivers’ logs. Just an FYI: When this factor is scored, violations involving hours of service will “count double.”

Factor 4, Vehicles

Factor 4 reviews the maintenance of the vehicle(s). The new carrier must have a program that “systematically” inspects, maintains, and repairs all commercial vehicles, including complying with the (annual) inspection requirements. Driver vehicle inspection reports (DVIRs) will also be checked (if required, there is an exception for a one-truck/one-trailer owner-operator). A maintenance file for each vehicle that shows all inspection, maintenance, and repair activity is what the auditor will want to see to prove compliance in this area.

Also taken into consideration in Factor 4 is the out-of-service rate. If the vehicles were placed out of service in 34 percent or more of the inspections, the score in Factor 4 will be affected.

Factor 5, Hazardous Materials

Factor 5 only applies to hazardous material carriers. Because of its complexity, we are not going to discuss this factor in this article. If the new carrier handles or transports hazardous materials, suffice it to say that extensive knowledge is required!

Factor 6, Accidents

The review of Factor 6 simply checks the new carrier’s accident performance. The investigator will take the number of FMCSA recordable accidents the carrier was involved in during the previous 12 months and determine the accident rate per million miles. This is only done if the carrier has had two or more accidents in the previous 12 months.

‘Scoring’ the safety audit

Following the safety audit, the investigator will “score” each of the Factors. Each acute violation is assigned a value of 1.5 points, and each violation of a critical regulation will lead to the assignment of 1 point.

Any factor that has 3 or more points assigned to it will be viewed as “not having adequate safety controls” by the carrier in that factor. If three factors are found to be over three points, the carrier will need to provide a corrective action plan immediately or risk the revocation of its registration.

Also, if the new carrier is found to have violated certain regulations, the investigator can literally order the carrier’s registration revoked immediately after the audit. These violations include:

• Failing to implement an alcohol and/or controlled substances testing program. 
• Using a driver known to have an alcohol content of 0.04 or greater to perform a safety-sensitive function.
• Using a driver who has refused to submit to an alcohol or controlled substances test required under Part 382. Single occurrence.
• Using a driver known to have tested positive for a controlled substance.
• Failing to implement a random controlled substances and/or alcohol testing program. 
• Knowingly using a driver who does not possess a valid CDL.
• Knowingly allowing, requiring, permitting, or authorizing an employee to operate a commercial motor vehicle with a commercial learner’s permit or commercial driver’s license which is disqualified by a state, has lost the right to operate a CMV in a state, or who is disqualified to operate a commercial motor vehicle.
• Knowingly allowing, requiring, permitting, or authorizing a driver to drive who is disqualified to drive a commercial motor vehicle. 
• Operating a motor vehicle without having in effect the required minimum levels of financial responsibility coverage. 
• Operating a passenger carrying vehicle without having in effect the required minimum levels of financial responsibility.
• Knowingly using a disqualified driver.
• Knowingly using a physically unqualified driver.
• Failing to require a driver to make a record of duty status. Requires a violation threshold of 51% or more of examined records to trigger automatic failure.
• Requiring or permitting the operation of a commercial motor vehicle declared ’’out-of-service’’ before repairs are made.
• Failing to correct out-of-service defects listed by driver in a driver vehicle inspection report before the vehicle is operated again.
• Using a commercial motor vehicle not periodically inspected. Requires a violation threshold of 51% or more of examined records to trigger automatic failure.

If the new carrier passes the safety audit, then the carrier is “lifted” off of “new entrant status” and will be viewed (and evaluated) as a regular carrier from then on.

Thomas Bray is an editor in the Transportation Publishing Department of the Editorial Resource Unit at J.J. Keller & Associates, Inc, specializing in motor carrier safety and operations management.