If you keep up with trucking news, you’ve probably heard about a new attempt to guarantee overtime pay for truck drivers. The Guaranteeing Overtime for Truckers Act, or GOT Truckers Bill, has sparked a contentious debate among industry representatives and leaders.
So, what is the GOT Truckers Bill?
The “Guaranteeing Overtime for Truckers Act” (GOT Truckers Act) was introduced by U.S. Sens. Alex Padilla, D-Calif., and Ed Markey, D-Mass., together with U.S. Reps. Mark Takano, D-Calif., and Jeff Van Drew, R-N.J. in early November.
It repeals part of the Fair Labor Standards Act that exempts truck drivers from overtime pay. The exemption was originally put into place to discourage truck drivers from driving too many hours. Critics of the exemption argue that more recent regulations regarding hours of service and ELDs make the exemption archaic. They also cite that the absence of overtime pay for drivers worsens the driver shortage and pushes experienced drivers out of the industry.
The GOT Truckers Act would lift the exemption from overtime pay for truck drivers in federal labor law, requiring carriers to pay drivers time and a half for every hour worked over 40 hours/week.
Who supports the bill?
Supporters of the GOT Truckers bill include the International Brotherhood of Teamsters, the Owner-Operator Independent Drivers Association, the National Owner-Operator Association, the Truck Safety Coalition, and the Institute for Safer Trucking.
Organizations supporting owner-operators believe that higher compensation for company drivers will lead to an increase in compensation for all drivers. Trucking safety experts also cite research suggesting that increased driver pay leads to fewer crashes.
The change was also recommended by a Department of Transportation 2022 Supply Chain Assessment.
Now, who opposes the bill?
Most notably, American Trucking Associations, an industry association formed by mainly large carriers, opposes the bill. The ATA’s president has been quoted as saying the change would “reduce drivers’ paychecks and decimate trucking jobs.”
How would this legislation affect drivers?
Company drivers with local routes (under ~150 miles) are typically paid using an hourly wage. This is the group of drivers who would be most directly impacted by the guaranteed overtime pay. Lifting the exemption would ensure these drivers are paid time and a half for the hours they work over 40 hours/week.
For example, today, if a driver is making $22/hour and works 50 hours during the week, gross pay would be $1,100 ($22 * 50 hours) for the week. If the new bill becomes law, the carrier would be required to pay time and a half for every hour worked over 40. Using the same wage from the example as before, the driver would be paid $22/hour for the first 40 hours and $33/hour for the additional 10. In total for the week, the driver would earn $1,210.
It’s important to note that some carriers already pay overtime to hourly drivers. Carriers that have been known to provide overtime pay include SAIA, Martin Brower, Kentucky Container Service, and World Kinect Corp.
A largely unanswered question remains: what does overtime pay mean for drivers paid by mileage (CPM)? Most OTR drivers are paid for the number of miles run, not the hours worked. If the driver is detained at the pickup or dropoff location of a load for more than two hours, they are paid an additional amount in the form of “detention”.
Notably, the CPM model doesn’t typically compensate drivers for the time spent fueling, doing inspections, or stopping for breakdowns/repairs. It remains unclear how the GOT Truckers Bill would affect this compensation model.
Finally, owner-operators leased under another carrier’s authority are typically paid a percentage of the linehaul rate. Because these drivers own (or lease) their trucks and are paid as independent contractors instead of employees, they are considered exempt from federal labor standards and would not be affected by changes to overtime pay rules.
Impacts on Small Carriers
To get a sense of how this bill could affect owner-operators and small fleets, we had a conversation with Mike Ritzema, President of Superior Trucking Payroll Service, a personalized payroll service dedicated to supporting trucking families.
Small fleet managers who hire drivers could be affected if their drivers are subject to federal labor standards. If you have a driver on the payroll, lifting the exemption for truck drivers would require you to pay time and a half for any hours worked over 40.
Ritzema suggests that, in the long run, its financial impact on carriers may be largely neutral. “Trucking companies can do algebra,” he said, explaining that if carriers are forced to pay overtime, they would likely reduce baseline hourly rates to compensate for the additional cost. His prediction aligns with the ATA President’s prediction that the bill would “reduce drivers’ paychecks.”
Ritzema also told us that the mileage-based compensation model would likely turn into an hourly or hybrid model that counts hours worked. Regardless of whether or not this law passes, it’s unclear how carriers are expected to pay for things like detention, downtime, per diem, and nights away from home for drivers paid by the mile. As it stands, there is no standard on the books and the GOT Truckers Bill doesn’t address these details.
Impacts on the Industry
More than a direct impact on payroll, however, lifting the overtime pay exemption for truck drivers could have different effects on the industry that could change the landscape for owner-operators and small carriers.
Firstly, if larger carriers experience disruption (or “chaos”, as the ATA President predicts), this could mean a short-term lift in tender rejections and an increase in spot market rates. This would provide some much-needed relief for carriers working on the spot market who are experiencing an industry-wide slump.
[Learn more about the cycles of the trucking industry and the spot market here: Is it a good time to start a trucking business?]
If larger carriers respond to the new legislation by reducing the number of hours drivers work, thus ultimately reducing pay to drivers, it could push more drivers to go into business for themselves or out of the industry altogether.
In our conversation with Mike Ritzema, he brought up the possibility of this response pushing drivers toward unionization. Many drivers today harken back to a time, decades ago, when truck drivers were united and organized in the United States.
In fact, the earnings of truck drivers decreased by 21% between 1973 and 1995, in part due to de-unionization. The impacts widespread unionization would have on the trucking industry is a topic for another article (probably many books as well). You can learn more about the history of unionization in trucking by reading this article from FreightWaves.
Another scenario (and perhaps, we’re being a bit optimistic) is that large carriers will demand higher rates/mile from shippers to compensate for the increased cost of doing business. This could lead to an increase in rates generally, like a rising tide that lifts all boats. However, as Ritzema reminded us, rates are more dependent on market forces, like truck capacity and freight volumes, than on cost pressures for carriers.
Of course, it’s impossible to predict exactly how the thousands of different industry players will respond to this legislation if passed. If the bill becomes law, hopefully, the regulatory agencies in trucking – the FMCSA and DOT – will provide guidelines on implementation and compliance to clarify uncertainties.
As always, we recommend staying up to date with news in regards to this and other policies that can affect trucking. FreightWaves and Overdrive are great places to start. You can also learn more about overtime for truck drivers on Mike Ritzema’s blog available on the Superior Trucking Payroll Service website.