Gov’t Task Force Report On Lease Purchase

FMCSA’s task force on truck leasing just released their final report on jan 16.

Bottom line; they believe the practice of companies leasing trucks to drivers is so broken they urge law makers to ban the practice.

They covered the various aspects of the process and found the common practices are tilted toward the carrier and in some cases found outright fraud. They found 1 in 100 people that enter into a lease purchase actually complete the process and own the truck. They also covered the AB5 laundry list.

Those are powerful statements, however many of us here and smart drivers already knew this information.

I am one for smaller gov’t, not bigger gov’t. I also am not a fan of people being preyed upon either. This is one of those issues I really hate to see because their really are no winners.

OOIDA is supportive of the report, but I guess ATA sure won’t be.

We’ll see how this all shakes out under the new admin.

Thanks for bringing that up, PJ!

Here at TT, we've always been firmly against leasing, as you know well, and this story confirms what we've always said: the contracts are designed by the company for the benefit of the company at the expense of the driver.

Trucking has such tight profit margins that you can't afford to have middlemen. In these leasing programs, there's no way to know who is involved. Did the company finance the truck and then provide the financing to you? Where did that money come from? Who is sponsoring all of it, and what do they get out of it?

Who knows? Could be several layers of financing involved coming from different sources.

Then, it should make people wonder why a trucking company would want to buy a truck and lease it to you instead of just hiring you as a driver. When do you see corporations help individual employees become business owners? Not too often!

A few simple questions about the process should throw a ton of red flags:

• Who pays for fuel?
• Who pays for repairs?
• Do I still get health benefits?
• Are there any mileage guarantees? What if I'm not getting enough miles to make my payments?

Just those few questions alone should make anyone take a step back and wonder what they're getting into.

Stay away from leasing trucks. The economics are terrible.

It's crazy we need a government task force to figure this out. I looked into this practice myself once. It didn't take long to see this is a game played by the corporation. It's the old stick and carrot lure.

I spent an entire chapter in my book exposing how the drivers who choose this path are getting short changed. There's no extra money for you to get by leasing. Even the ones who think they are doing well usually end up having an unexpected wake up call. Something goes wrong and they find out they are financially responsible for it.

It's a business with very tight margins. The way to make money is to be on the payroll outperforming the other drivers.

I find it very questionable that in order to be a subcontractor in this industry you must either own, lease or purchase the equipment. It's criminal in nature and eliminates the option of running a small labor only business. Most other industries don't have that.

For the most part OTR and regional employees get paid piecework yet we can not negotiate prices, can not turn down jobs in all reality, we often loose big time on ancillary pay and the base rate per unit doesn't make up for it. Not singling any companies out, it's industry wide.

The solution is simple, keep the mandate about allowing contractors to select jobs, negotiate pay and rate, but allow them to use the carriers equipment. Contractors would have to maintain insurance but can go under the carriers authority and insurance policies as well. Contractor would maintain appropriate licenses (CDL and endorsements). Contractor would maintain appropriate workers comp on self or waiver if applicable and or option to go under carriers. Contractor is paid as a business, so 1099.

If there was a labor only gig that was business to business simular to construction contracting, I'd be doing it now.