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California could be next step toward hourly pay

Paying drivers by the hour instead of the mile has been discussed for years, and often dismissed. However, recent developments are moving it into the mainstream.

An hourly rate of at least the federal minimum wage for all on-duty hours was considered as a potential new mandate by the White House, included with its proposed Grow America Act highway bill last year. That didn’t survive in the bill that passed, but such attention to time-based compensation has helped spawn what Gordon Klemp of the National Transportation Institute has called a growing interest from carriers in exploring the few hourly pay models that exist among more sizable carriers today.

In the rapidly evolving trucking marketplace, other versions could emerge. Technology-enabled brokerage Cargo Chief, in a February interview, revealed plans to unveil a time-based contract system. Independents would be paid a set lump sum for a set period of time in exchange for an agreement to haul the broker’s shippers’ loads.

One form of hourly compensation for drivers, detention pay, is already commonplace, but it’s still short of the ideal many drivers have long sought: pay for all time worked.

Owner-operator Joe Ammons, among others, has taken that ideal further by advocating for repeal of the federal Fair Labor Standards Act’s exemption of interstate transportation workers from federal overtime pay requirements, an action the Owner-Operator Independent Drivers Association, among others, supports. If such a move was made at the highest levels of government, where it saw some action with a 2014 recommendation from the federal Motor Carrier Safety Advisory Committee, the end result might well be an hourly model, at least for company drivers.

The largest group of respondents (61 percent of cumulative responses) to this poll indicated long-term expectations for rates and pay that could turn out positively or negatively. Respondents, polled early this year, were allowed up to three choices.

Meanwhile, federal pre-emption of state rules, such as California’s meal and rest breaks, has seen erosion in court and met with strong driver opposition. If that opposition continues, hourly pay for most company drivers could ultimately become a norm.

The West Coast state’s labor laws require meal and rest breaks for shift workers – a half-hour meal break every five hours and at least a 10-minute rest break for every four hours worked. In 2014, the Ninth Circuit Court of Appeals decided the California laws applied to truck operators.

Numerous states have some version of such laws. However, trucking companies have long assumed that the 1994 Federal Aviation Administration Authorization Act’s federal pre-emption clause in essence exempted carriers from complying with them.

The 2014 Ninth Circuit ruling spawned lawsuits seeking class action status against fleets domiciled in California or employing drivers living there. The penalty for not complying with the Golden State’s rules (such as an hour’s pay for every meal break not provided) became an attractive carrot for lawyers looking for big settlements.

There’s evidence that some employers, in order to avoid such lawsuits, have adopted a defensive posture, requiring all drivers to shut down for 30 minutes every five hours to comply with the meal break rule, complicating drivers’ hours of service.

Joe Rajkovacz of the Western States Trucking Association has warned that the ruling could lead to a confusing state-to-state patchwork of de facto hours of service regulations. His thoughts on the “safe position” for employers faced with new applicability of wage and hours laws? “Migrate toward paying a minimum [hourly] wage with some incentive on top of it,” such as percentage of the load or mileage pay.

As this report was going to press, the FAA reauthorization bill being discussed in the U.S. House contained a measure to re-establish federal pre-emption. If it ultimately remains in the final bill, Rajkovacz notes, it would put the brakes on the developments in California.

— By Todd Dills

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