Will Wage and Hour Rumbles... Affect You?

Again, G/MAN, this isn't a thread for your complaints about unions. You've made your position that 'companies can't pay drivers for not working' yada, yada. Thread's not about unions. It's also not about companies paying drivers not to work. But I'm glad you brought up brokers.

Engel (http://www.bls.gov/mlr/1998/04/art3full.pdf) claims that in 1973 only 75 brokers were licensed by the I.C.C. (Interstate Commerce Commission which pretty much went bye-bye with the Motor Carrier Act of 1980).

She claims that there were 6,100 licensed transportation brokers in 1988 and 8,000 "by the end of 1993." The rise in brokers paralleled the rise in L/O's (Lease Operators) who owned or were buying trucks they leased on to carriers.

If I understand her correctly, prior to 1980, O/O's (Owner Operators) pulled almost exclusively agriculture. She says that between 1995 and 1996, there was an 80 per cent increase in miles driven by leased drivers as "intra- and interstate deregulation opened up new routes and introduced new suppliers..." as freight forwarders and transportation brokers "rushed in..."

Engel states that "62% of for-hire truckers were unionized in 1973; this fell by half to 30% by 1984. In 1996, 23% of truckers were unionized."

She goes on that, "With the onset of price competition, nonunion carriers easily won business on the basis of lower labor costs."

Engel states that, "Carriers... have shifted the burden of unforeseeable delays onto truckers... compensation per mile fell by an average of 44% between 1977 and 1987."

Sounds like we were locked into the proverbial race to the bottom as far as trucker wages were concerned with this huge drop in compensation (44%) accompanied by this huge growth in lease operators running freight for carriers as cheap or cheaper than their company drivers, which put lease operators in competition with company drivers.

As driver compensation for all drivers fell--including for lease operators!!

 

So Quezada v Con-way is likely going to be a new watershed as the Motor Carrier Act of 1980 was a watershed. Engel's 1998 article stated that trucker compensation dropped 44% between 1977 and 1987.

44%, huh?

Hey, that's quite a haircut for us drivers. De-regulation didn't do us a lot of good apparently.

There's another trucking history timeline at--of all places--the IRS.

No kidding.

Well, they do keep track of who makes how much, after all. And their timeline goes back to the 1800's and into some interesting detail not available elsewhere--I think.

Question's whether the IRS is a reliable source, of course...

Might as well look it over, after all if Quezada v Con-way is the watershed of the second-decade into the 21st Century, maybe past watersheds will enlighten us some, throw a lamplight to the future.

Or not. Dunno. We'll just hafta wait and see... about Quezada at least.

 

Why Quezada Is a Likely Watershed

Does this all matter? The huge drop in driver compensation that Engel refers to after deregulation? I mean, is this a big so what and what does it have to do with Quezada v Con-way, for Pete's sakes?

Well, it does, it should.

After the Motor Carrier Act of 1980 (deregulated interstate trucking) and the 1995 Trucking Industry Regulatory Reform Act (deregulated intrastate trucking), according to Engel, carriers shifted the burden of delays onto company drivers and lease operators.

Aha!!

You had this big surge in the number of lease operators, brokers and new routes and new freight to ship and the cost of shipping dropping along with driver wages.

You can kinda imagine what's going on in the carrier boardrooms...

Overpaid Executive: "Wow. It's really getting competitive out there. Seems like we're constantly dropping rates."

2nd Overpaid Executive: "It's a little scary. I mean, we've pretty much priced the union outfits out of business. But it looks like our lease operators are running our company drivers out of business even as little as we pay them."

Overpaid Executive: "Why have lease operators taken such a large share of our business, I mean, what's their edge compensation-wise?"

2nd Overpaid Executive: "We only pay them for the miles they run. Wheels don't turn, we don't pay them... "

Overpaid Executive: "Why can't we do that with company drivers? There's no law that says we can't is there?"

2nd Overpaid Executive: "I think you just got a bingo... "

Until now, at least in California. Quezada v Con-way.

Companies like Con-way can no longer pay company drivers just mileage, pay them only when the wheels turn, yet require non-piece-rate work (fueling, breaks, loading, unloading, etc) for no pay.

It adds up, too. Just ask Con-way.

Just wait until Jan 9, 2015. Why? To see how big this settlement is.

That's why.

 

Let's look at what the IRS (US Internal Revenue Service) says about the history of trucking. http://www.irs.gov/Businesses/Trucking-Industry-Overview---History-of-Trucking

Late 1800’s
The Federal Government began regulating transportation companies to prevent railroads from charging unfair freight rates. Regulation also helped to protect transportation companies from unfair competition.


1935
Congress passed the Motor Carrier Act. This gave the Interstate Commerce Commission (ICC) authority to regulate the motor carriers and drivers involved in interstate commerce by granting operating permits, approving trucking routes, and setting tariff rates.

The ICC set uniform tariff rates for hauling freight. Since the rates were uniform for all trucking companies, there was little or no competition due to pricing.


Mid 1900’s
Containerization became a popular method of transporting freight, to reduce shipping costs, reduce handling of the freight, and cut losses due to damage or theft.

Containerization consists of packing freight into big metal boxes called containers. The containers can then be transferred between container ships, truck trailers, and railroad flatcars.

Trucking is often used in combination with the railroad in a method called "piggybacking." This occurs when the trailer chassis (with the loaded, sealed container attached) is separated from the tractor and loaded directly onto a railroad flatcar.

When the trailer arrives at its destination by railroad, the container is reconnected to another tractor for transport to its final destination.

 

More what the IRS (US Internal Revenue Service) says about the history of trucking. http://www.irs.gov/Businesses/Trucki...ry-of-Trucking

1967
Department of Transportation (DOT) is created. Through the Office of Motor Carriers and the National Highway Traffic Safety Administration, DOT oversees a wide range of requirements such as braking standards, driver licensing standards and their maximum work hours, and the overall safety fitness of interstate carriers.


1980
The Motor Carrier Act of 1980 partly deregulated the trucking industry. In the decade after deregulation, the competition in trucking was fierce. (Bold added.)

There were not only hundreds of new companies, but also the formerly gentlemanly manner in which the big players dealt with each other became a battle to the death. Ten years after trucking was deregulated, one third of the 100 largest trucking companies were out of business, casualties of the fierce competition. (Bold added.)

It became increasingly difficult for the trucking companies to operate with union drivers. Their compensation is usually 35 percent more than non‑union drivers. To reduce operating costs, new corporations were formed to operate with non‑union drivers or independent contractors. (Bold added.)


1982
The Surface Transportation Act of 1982 set uniform size and weights limits for the trucking industry nationwide. Under this law, trucks that use interstate highways may not weigh in excess of 80,000 lbs.


1994
Carrier Reform Act
Reduced the time for customers to file an OVERCHARGE CLAIM from 3 years to 2 years effective 12-3-93 to 8-26-94. Reduced to 6 months after 8-26-94.

 

Even more what the IRS (US Internal Revenue Service) says about the history of trucking. http://www.irs.gov/Businesses/Trucki...ry-of-Trucking

1994
North American Free Trade Agreement (NAFTA) passed and resulted in explosive trade with Mexico. Since 1994, Mexico’s northern states have created 2,554 manufacturing plants that provide U.S. companies with assembly goods.

Most of the production is done for just-in-time deliveries, so trucks are constantly crossing the border to either deliver parts or pick up finished merchandise. But as of 2004 Mexican trucks are still not allowed to travel freely throughout the entire U.S.


1994 & 1995
Deregulation essentially was completed with the enactment of additional legislation. Because of these Federal changes which pre-empted the states from regulating the intrastate activities of interstate carriers, many states have either deregulated or significantly eased the economic controls placed over the truckers operating solely within their borders.


1995
Interstate Commerce Commission (ICC) is abolished. In sun setting the ICC, Congress further eased economic controls. The Surface Transportation Board is the Federal entity now administering the remaining regulatory functions. The STB is an independent unit within the Department of Transportation.

1998
National average diesel fuel price per gallon in 1998 was $1.0440.


1999
Motor Carrier Safety Improvement Act of 1999 outlawed the practice of Mexican trucking companies leasing their vehicles and drivers to carriers in the U.S. The Mexican companies leased their vehicles to U.S. companies so they could operate legally throughout the U.S.

The act also established the Federal Motor Carrier Safety Administration, whose stated purpose is to reduce the number and severity of large-truck involved crashes through more commercial motor vehicle (CMV) and driver inspections and carrier compliance reviews, stronger enforcement, expedited completion of rules, sound research, and effective commercial driver’s license (CDL) testing, record keeping, and sanctions.

National average diesel fuel price per gallon in 1999 was $1.1210.