Lease-purchase programs offered or managed by motor carriers in the trucking industry are under perhaps their biggest challenge to date.
The Truck Leasing Task Force (TLTF), established by the Federal Motor Carrier Safety Administration under Congressional directive to investigate the impacts of these programs, issued its findings in a report to Congress and the Department of Transportation, ultimately concluding -- unanimously -- “that the costs and harms of lease-purchase programs are so great that these programs should not be permitted.”
The report said that when the task force was established, some of its members “believed lease-purchase programs could provide an important avenue to truck and small business ownership.” However, after a year and a half of meetings in which the TLTF heard comments from drivers and non-driver trucking industry stakeholders, task force members determined that “lease-purchase programs cause widespread harm without offering meaningful scale opportunities for truck and small business ownership.”
TLTF said it formed a consensus to recommend that such arrangements, in which a motor carrier controls the work, compensation and debts of a driver, should be prohibited. They said such programs “promote a race-to-the-bottom in driver compensation and treatment, pushing qualified drivers out of the profession. Currently there are no effective checks on these programs or remedies for drivers harmed by them. Litigation, currently the only avenue for relief, can provide some remedy for the drivers involved, but has not led to reform of these programs.”
While tales of owner-operators getting their start through carriers' lease-purchases aren't unheard-of, the task force noted that it “heard no evidence that lease-purchase agreements were an important means for drivers to achieve truck ownership or to become small business owners.” In fact, TLTF said, the comments and data it saw “suggested that driver success is rare enough that programs seem designed to ensure failure for the overwhelming majority of drivers.”
The Owner-Operator Independent Drivers Association commended the task force for its findings.
“Many people are drawn to trucking under the belief that hard work guarantees success,” OOIDA President Todd Spencer said. “But predatory lease-purchase agreements prey on that trust, leaving drivers financially and emotionally broken.” OOIDA as an organization, reps noted, "remains committed to working with lawmakers and regulatory agencies to protect drivers and eliminate predatory practices in the trucking industry."
Representatives from the American Trucking Associations, by contrast, noted they were “reviewing the report and the recommendations that were made by the task force," adding that the organization was committed to "protecting individuals' right to choose work arrangements that align with their unique needs and goals.”
[Related: Carrier lease-purchase programs should be 'outlawed': FMCSA task force chairman]
Recommendations from the task force
The TLTF’s final report is available for download via this link -- and was informed by an evidence report by the Consumer Financial Protection Bureau also released at this link. (The CFPB's report followed the TLTF's outreach to the industry for examples of truck lease-purchase arrangements, which garnered 46 responses, as well as other research.)
The task force's top recommendation is for Congress to ban lease-purchase agreements offered under the control of motor carriers “as irredeemable tools of fraud and driver oppression that threaten a safe national transportation system and diminish the number of truck drivers attracted to and who stay in the trucking industry,” according to the report. An outright ban on lease-purchases “would be the most efficient and effective remedy to stop the damage created by lease-purchase programs,” the report added.
Yet the task force recognizes the difficulty of achieving an outright ban, offering a variety of other recommendations it says are designed to help “mitigate the harm that these programs cause individuals, the truck industry, and our nation’s transportation system":
- Congressional oversight -- The TLTF recommends Congress appropriate sufficient funds and provide authority for FMCSA, the Department of Labor, the Federal Trade Commission and the Consumer Financial Protection Bureau to oversee lease-purchase programs. The reports recommends Congressional hearings on the programs and their impacts, as well as whistleblower protection legislation for drivers reporting predatory programs to FMCSA, CFPB and DOL.
- FMCSA oversight -- FMCSA should mandate that motor carriers and their affiliates offering lease-purchase programs keep accurate records of the experience of people who sign such agreements, the report recommends.
- DOL enforcement -- The report urges conducting targeted audits and enforcement against companies utilizing lease-purchase programs to ensure they’re in compliance with labor regulations, likewise published guidance for truck operators to educate them on arrangements that may violate DOL regs. Likewise, the task force urges pursuit of back wages and overtime for drivers who have been misclassified.
- Legislation or regulation to require disclosure of contract terms, success rates, and expected take-home pay.
- State and local law enforcement -- If federal law doesn’t address lease-purchase programs, state and local law enforcement agencies should review contracts and agreements operating within their borders to determine whether state rules apply to address fraudulent or oppressive contracts and take any necessary action.
[Related: Lease-purchase task force zeroes in on restrictive maintenance covenants]
