What’s a reasonable rate to pay a CDL driver?

Discussion in 'Car Hauler and Auto Carrier Trucking Forum' started by Atlanticus trucking, Jan 3, 2019.

  1. brian991219

    brian991219 Road Train Member

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    You can send
    You can find alternate contact info for me at my website www.yourdotguy.com
     
  2. Atlanticus trucking

    Atlanticus trucking Light Load Member

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    Thanks, we offered him 70% and he pays expenses. Sidebar question, if he owns he own company and i 1099 him:

    1. Does he run under under my dot number or his?
    2. Is the insurance under his company or mine? Truck is his trailer would be mine.

    This structure is what we offered based on this thread feedback. Thank you. Also same questions as above. Truck is his, trailer is ours. Do you know how would insurance and DOT be handled?
     
  3. 8thnote

    8thnote Road Train Member

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    Whover owns the authority pays for general liabilty and cargo insurance. Whoever owns the truck pays for bobtail/non-trucking liability as well as tags.
     
  4. brian991219

    brian991219 Road Train Member

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    It could be done either way if he has active authority and insurance, however if it is under his authority and insurance then he should be paid more since he is shouldering more of the liability. If you use his authoriry though, you would be a broker giving him work and may need broker authority. As a compliance specialist I strongly suggest a typical lease on scenario using your authority. Insurance must be in the name of whichever operating authority is used.

    Typically in these situations the tractor owner leases onto the motor carrier. The motor carrier by law is responsible for the cargo and public liability insurance, the truck owner pays for their non-trucking (bobtail) and physical damage (collision) insurance. Usually the motor carrier provides a base plate, IFTA and all operating permits. These can be charged back to the truck owner if your agreement allows. You can also charge actual costs for insurance, although many carriers simply include this in the base rate they pay the driver, making 70% a decent rate if you cover these expenses.

    For your operation trailer ownership is slightly higher than the average dry van freight company so I think you are fair at 70%.

    Other things to consider when leasing on an owner operator. From the FMCSA perspective a leased operator is the same as an employee driver meaning you must complete an employment application, background verification and place them in your drug testing pool, same as you would for an employee driver. Also, as the operating motor carrier you are legally liable for their truck, any violations occured and the actions of the driver while under dispatch -same as if it were a company owned truck with an employee driver. This includes maintaining a vehicle file with proof of service, repairs and inspections.

    Lastly, in either case your authority or his, as an owner operator you would 1099 him and he would remain responsible for the upkeep and repairs on his own tractor. Fuel and tolls are between the two of you, typically the truck owner pays fuel and tolls with any fuel surcharge going to them 100%.
     
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  5. ast26909

    ast26909 Medium Load Member

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    You can do either way but if he already has DOT authority then you would prefer him to run under his because if he racks up violations or OOS (out of service) while running under your DOT then he can literally put you out of business. If you don't already know this Progressive Insurance WILL NOT RENEW your insurance if you have 2 OOS within one year period, without insurance you will be out of business or with too many violations on your DOT record you will pay sky high insurance rate.

    As already stated by other posters here if you let him run under your DOT (your DOT number displayed on his truck) you must add his truck and list him as a driver to your insurance policy, get him to do a pre-employment drug screen, add him to a random drug testing consortium, start and maintain a driver file for him, start and maintain a vehicle file for his truck, start and maintain a trailer file for your trailer. You (or whoever manages drivers) must complete a course called 'reasonable suspicion drug testing training' this can be done online and you will get a certificate after completing the course.

    If he runs under his DOT then you would need to add 'broker' authority to your existing DOT authority, you can do this online at the FMCSA website there will be a $300 application fee but the kicker is you need $75,000 'broker' bond which will probably cost you $750 per year.
     
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  6. Atlanticus trucking

    Atlanticus trucking Light Load Member

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    Thanks for your detailed answer as always. What’s the reasoning for suggesting a typical lease on scenario if it seems like the terms are better for me when using his authority?

    Also when we are talking about him using his authority, are we referring to him using his MC number? Meaning in order for him to use his own, he would need both a DOT and MC number?

    So if he runs under his DOT then everything I bolded above becomes his responsilbity?
     
  7. brian991219

    brian991219 Road Train Member

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    I suggest a typical lease operator scenario because it is normal and you will not have to add broker authority to your company.

    Yes, for him to use his own authority he would need a US DOT and MC number, meaning he wouldn't really need you. He would have to do everything you do to own a trucking company so all your value would be is as a broker, maybe 5-10% of the load. He would have the astronomical insurance among other liabilities.

    So yes, if he runs under his own authority then he would be fully responsible for everything. This also means he can pull his own loads off the boards, haul for other customers and steal your customers! He would only be responsible to you for whatever the trailer rental and maintenance amount is when he is hauling his own work.

    Also, if he were under his own numbers he would need to have trailer interchange insurance specifically declaring your trailer and it's value so that you are covered in the event of a loss. Under your number it is your insurance so the trailer will be covered anyway.
     
  8. ast26909

    ast26909 Medium Load Member

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    If he runs under his DOT then yes he would need both DOT and MC number, have his own insurance..., just like you are now it would be his own trucking company. Points were raised that he doesn't need you, can do his own loads, steal your loads... the points are valid but it's not that easy if he is owner/operator and by himself, he would need to look for loads (or pay a dispatcher), do billings, keep track of invoicing, payments... If you dispatch him he just runs and collect payment from you, you also guarantee his pay this is equivalent to factoring (which takes 3% gross) also 5% would be for your trailer repair/maintenance cost so you really get 20% from the arrangement.

    With the typical leased on O/O you would be responsible for everything any DOT violations or OOS will be on your company record, if he does something wrong he can just washes his hands and go lease on with another company.

    Either way I would recommend to install a GPS tracker on your trailer, I use the one below.

    FLEET WATERPROOF TRACKING DEVICE - GPS Tracking
     
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