Rethinking Driver Pay

Carbon Express rarely sees its driver turnover rise above the single digits. In comparison, American Trucking Associations statistics show turnover at small truckload fleets, while lower than that at large fleets, has been running between about 70% and 80% the last several years.*

Steve Rush, a former driver and owner-operator himself, is founder and CEO of the New Jersey-based tanker fleet and has long been a fierce advocate for drivers. He was honored as an HDT Truck Fleet Innovator in 2015 for his early adoption of electronic logs and his practice of putting his drivers in hotels instead of sleepers. But he has not been resting on his laurels, and today he’s passionate about the need to rethink how the trucking industry pays its drivers.

The driver shortage and driver retention were the top two concerns among motor carriers in the American Transportation Research Institute’s annual Top Industry Issues survey last year. But one only needs to look at the survey’s findings among commercial drivers to get some big clues on how to fix it. Drivers’ biggest concerns were driver compensation, truck parking, and detention/delays at customer facilities.

But addressing driver compensation is more complicated than simply raising per-mile rates.

Leah Shaver has been tracking driver pay packages for seven years as president and CEO of The National Transportation Institute and spent 14 years before that in driver recruiting and human resources at a motor carrier. Her advice to trucking fleets that want to improve their compensation plans in order to attract and retain drivers: Address driver pain points first.

“It not only fills a gap of driver complaints, but it also tells folks that you really listen, that you care, and that you’re filling in the components that aren’t necessarily trending,” she says.

One of the largest pain points is that in traditional mileage-based pay plans, drivers go unpaid or are underpaid for delays they have no control over.

“There’s nothing that chases a driver away faster than being down and unproductive, and, of course, unpaid,” Shaver says. Or if they are paid for activities such as waiting to load, it’s not nearly enough to match what they make behind the wheel.

“The whole driver pay concept is something we’ve wrestled with quite a bit,” admits Jeremy Stickling, chief administrative officer for Illinois-based Nussbaum Transportation, which was the overall winner in the large fleet category in the 2021 Best Fleets to Drive For program from the Truckload Carriers Association and CarriersEdge.

“We’ve heard plenty of driver feedback, you know, ‘If the wheels aren’t turning, I’m not earning. If it’s not a long load, I don’t want it.’ The number of loads means little. If I run nine loads in a week and that only gets me 1,800 miles, I’m in rough shape [pay-wise] because of this mileage-based pay.”

Nussbaum calls its pay package logical pay, he says, “acknowledging that a lot of things in the typical trucker pay system don’t make common sense.”

Guaranteed Pay

One of the complaints drivers have about mileage pay is that their checks aren’t predictable from week to week and can be slashed by factors out of their control. They’re detained for hours at a shipper or receiver. Their truck breaks down, or they have to pull over because of bad weather, or they have to lay over because the company doesn’t have another load for them yet.

About five years ago, some enterprising trucking companies started to offer guaranteed or minimum pay packages to address this problem. Central Oregon Truck Company was one of the first.

The open-deck company has tweaked the program since then, simplifying it to make it easier for drivers to understand, explains Luke Williams, president of COTC, which was honored as one of the top 20 Best Fleets to Drive For in 2021. The company rolled some activity pay, such as tarp pay or stop pay, into a pay raise.

“We put it in with a raise so they could see, ‘OK, I’m not getting paid individually for those items. But at the end of the day, my weekly check’s more.’” Williams says.

The COTC salary program has different tiers depending on performance. The minimum in the over-the-road fleet starts at 2,300 miles for the week.

Nussbaum has a minimum pay program of about 80% of a typical week. “We don’t want to pay the guarantee, [because] we want drivers to do better, but we still make it a nice safety net,” Stickling says.

Drivers must be available for dispatch that week to qualify. Nussbaum also offers Guarantee Savers, which allow drivers to take a day off up to five times a year and still be eligible for the minimum guarantee.

Shaver cautions that all “guaranteed” pay programs aren’t created equal.

“Many times, a guarantee still has productivity requirements or other requirements built in,” she says. “From a driver’s perspective, that really isn’t a guarantee. What they do accept, of course, as a global requirement is you just have to be available for work.”

Hourly Pay

Steve Rush has taken a different approach at Carbon Express: paying by the hour. Electronic logs made that possible.

“The e-log has become our drivers’ time clock,” he says. “Drivers are paid for every hour they’re on duty. And if they’re broke down, it makes no difference. If they’re on duty, they get paid.”

Long-haul drivers are paid via a mixture of miles and hours.

“The toughest person to find is the long-distance guy or the girl that would stay out and run those long trips,” Rush says. “So, we set them up to pay for the mile and pay two hours guaranteed at each pickup and each delivery no matter how long it takes. And anything over two hours they go back on the clock.” He says paying long-haul drivers strictly by the hour would actually result in less pay, thus the hybrid pay model. “They’re the hardest to find; we want them to make the most money.”

Paying for Downtime

In fact, a hybrid model of mileage and hourly is where NTI sees the best results, according to Shaver. “Paying mileage for the long-haul driving, that makes sense to them. They are still motivated by productivity incentives, and companies want to make sure that drivers are still going to be productive. So, paying mileage for the driving duties that are long haul makes perfect sense.

“However, they just want to be fairly compensated for the work time that’s allotted to them that typically is not compensated fairly.”

That’s why in addition to mileage pay, companies are increasingly paying an hourly wage or flat additional compensation for duties even if the wheels aren’t turning. NTI calls that activity pay, and Shaver cites examples such as pay for loading/unloading and for inclement weather delays.

For instance, Nussbaum pays drivers $20 for each pickup and each delivery, whether it’s 15 minutes or 45. “The idea there is if somebody turns 10 loads a week and only runs 1,700 miles, they can still do pretty good with that activity pay,” Stickling explains.

One of the uncompensated duties that most bothers drivers is detention — excessive delays at shippers and receivers waiting to load or unload.

Typically, carriers expect drivers to wait up to two hours without pay to load or unload.

At Nussbaum, that’s only one hour. Starting at the second hour, it’s $20 an hour. And because they’re paid $20 for every pickup and delivery, essentially that first hour of detention is already covered.

The detention issue is so bad, it’s being addressed in the Trucking Action Plan from the Departments of Transportation and Labor as they try to solve supply-chain problems. Administration officials cited an MIT study showing that long-haul drivers only spent an average of six and a half hours per day driving, despite being allowed to drive 11 hours a day. That means about 40% of their daily capacity is not being used. The two departments are studying the issue of truck driver pay and unpaid detention time.

Layovers and Breakdowns

What happens when drivers are stuck waiting for a load? Stickling says typically, trucking companies pay for layovers only a fraction of what drivers normally would earn in a day.

“We don’t do that. We keep it consistent with where their salary is at. Why reduce the rate [you pay the driver]? Usually that’s a canceled load or a customer saying, ‘We aren’t going to take you today.’ And it’s not the driver’s fault.”

Central Oregon Truck Company offers “dwell pay,” where if dispatch doesn’t have a driver rolling to his next load within an hour of the driver calling in that he’s empty, the driver gets $100.

Another type of downtime typically out of a driver’s control is that for equipment breakdowns or needed maintenance or repairs. And it’s worse than ever, says NTI’s Shaver, thanks to parts shortages due to supply-chain issues. “So, look at your downtime policies for maintenance and how that’s compensated.”

At COTC, Williams says, if time’s lost for breakdowns, the company still pays for the week at the salary tier the driver would have received based on his typical performance. At Nussbaum, after two hours drivers get $20 an hour and at five hours switch to layover pay at a daily rate. And Carbon Express pays hourly for all on-duty time as long as the driver is under a dispatched load.

Some fleets are even offering sleeper berth pay, according to NTI. When drivers have to be away from home, when federal rules require them to spend a certain amount of time in the sleeper berth, they’re paid for that time just like they would an unexpected layover.

“It’s a different version of layover pay,” Shaver explains. “Layover historically at a trucking company means that you don’t have a load and you are laid over due to not having an assignment that day. Sleeper berth pay compensates the driver even when they are under a load but they are sleeping in the truck and away from home.”

Shaver also recommends reimbursing drivers for paid parking and providing Wi-fi or a cell-phone reimbursement.

“Just pay directly for extras,” agrees Stickling. When drivers have to do online training, for instance, they may resent having to do it without pay. And Nussbaum pays for parking, no questions asked. “Those are little areas where you can lose a driver or lose some credibility.”

Everyone Needs Time Off

Paid leave among the companies tracked by NTI ranges from five days to 45 days a year. It varies by the company and type of work, but paid time off for truck drivers is traditionally compensated at a lower rate than their average pay.

“One of the biggest things we hear is that drivers don’t take advantage of paid leave,” Shaver says. “They tend to take the cash but not take the time off.”

Steve Rush says that’s because the lower pay means drivers are “going backward” if they take time off. Vacation pay that closely matches a driver’s average earnings cuts down on drivers wanting to keep working while they get vacation pay. And at Carbon Express, drivers only get vacation pay if they actually take time off.

“We want them to take the vacation, we want them to get out of the truck and go spend some time with family,” he says. “That’s been a real plus for us in holding the driver and letting the driver know that we truly do care about them.”

Stickling admits that until recently, Nussbaum paid lower than salary rates for time off. “Again, just things our industry has gotten used to that it shouldn’t have,” he says. At Nussbaum, by six years drivers can get three weeks of paid vacation, and five weeks by 15 years. Plus there are eight paid holidays.

At Central Oregon Truck, instead of paid vacation, drivers get “loyalty pay,” which drivers can use to compensate for time off. At the end of his or her first year, a driver gets a week’s worth of extra pay. Year two, it’s two weeks, and year three and beyond, three weeks’ worth. COTC also offers five days a year of paid sick leave.

About four years ago, New Jersey, where Carbon Express is based, mandated that companies give employees five paid sick days. “We said, if we’re going to do that for our Jersey drivers, we’re going to do it for everyone across the country,” Rush says. While he initially had misgivings, he says, he’s found the extra cost is worth it in driver satisfaction.

Before that, he says he “could count on one hand how many people took a sick day.” With paid sick leave, drivers don’t have to feel compelled to work when they’re sick. “It also makes them feel good that they can call up and say, ‘my wife is sick, or my daughter or my son is sick, I really need to be with them at the hospital.’ And they’re able to take that day off and get paid,” Rush says.

Communication Counts

The best pay package in the world won’t help recruit and retain drivers if you don’t do a good job of communicating it, not only to potential drivers, but also to existing ones.

Shaver recommends carriers not only market the benefits of a pay package externally in driver recruiting, but to also market it internally. She suggests each month covering a different topic, such as benefit packages, different aspects of the pay package, or how to achieve certain bonuses.

“Communication has always been really challenging when it comes to compensation internally,” she says. And it’s only gotten worse in the last several years, as more and more trucking carriers add different types of trucking under their roof. Dedicated operations, teams, last-mile, less-than-truckload versus truckload, may all have different pay packages. And pay packages can be complex. Shaver points out that NTI tracks about 130 different pay attributes.

“Imagine what it’s like for the professional driver to not only understand how to achieve certain pay metrics, but also how to reconcile their paycheck with what was expected versus what was delivered.”

* Driver turnover 2015-2020, carriers with $30 million or less in annual revenue, as reported in the HDT August 2021 Fact Book. 2021 numbers were not available from ATA.