Why we need to eliminate the overtime exemption to the Fair Labor Standards Act to solve the driver shortage

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Updated Dec 7, 2021

The Fair Labor Standards Act (FLSA) was enacted in 1938 at 29 USC §203. The Motor Carrier Exemption, which exempts motor carriers from overtime pay, came in a 1966 amendment.

Perhaps, once upon a time, there was a place where the exemption was justified but during the ensuing 55 years, technology has made the exemption outmoded, the disproportionate labor market inequity is outdated, and the perpetual driver turnover at large fleets is out-of-touch with small and private fleets. That blatant disparity (94% vs 14% turnover) should clearly demonstrate that it’s the business model that has a shortage: It’s a failed model.

When a driver is paid by the mile yet regulated by hour, there will be a natural disconnect as the financial incentives are constrained by the clock. Truckers in the U.S. are regulated by a set of hours of service rules that limit driving to 11 hours per day with up to 70 working hours in an 8- day period. This inherent regulatory disconnect breeds unnecessary driver risks, instills driver abuse of their no-driving hours, undermines driver recruitment and retention and poses a public safety road hazard.

For example, because “when the wheels ain’t turnin’, the driver ain’t earnin’,” when a driver confronts inclement weather, he/she must park the truck. There’s a financial incentive for the driver to push on, even when conditions might otherwise suggest prudence.

When a truck breaks down, blows a tire, overheats, or anything else as often happens, the wheels stop and the driver doesn’t get paid. The driver goes “off-duty” to preserve their available hours.

When the truck shows up for an appointment to pick up a load at a shipper or arrives at the consignee for delivery, the driver similarly goes unpaid while being detained – sometimes for hours. Again, the driver goes “off-duty” to preserve his available hours. Without a financial cost associated with detention at the dock, the carriers have no incentive to contact the shipper or consignee to ascertain the reason for the hold-up. If the carriers were required to pay the driver for all “off-duty” and “on-duty, not driving time,” then one can rest assured that the carriers would soon figure out that detention costs them money and would add a freight ticket surcharge for detention. Detention problems would be cured virtually overnight.

And while we’re at it, let’s put a proper value on that detention time. The equivalent 60 mph truck at today’s $3 per mile freight rate yields a $180/hour cost. If carriers charged shippers and receivers for all time that a truck is on-site, that truck would get loaded or unloaded right away. The inefficient notion of “first-come, first served” is predicated on sufficient warehouse staff, but that cost of inefficiency is borne entirely by the driver.

The carriers assert that the on-duty nature of the job and its remuneration is baked into the mileage rate. Moreover, carriers have argued that they cannot know where the rig is, how many hours of service the driver has, and they are unaware of traffic and road conditions. None of these are true today. Since full implementation of electronic logging devices in December 2019, fleets know exactly the vehicle’s location, know the driver’s available drive time and telematics provide the capability to see the precise operating conditions of the vehicle.

Consider the driver shortage itself. With a historical average turnover hovering just shy of 100% among American Trucking Associations member fleets, it’s clear that there is a driver retention issue, not a driver shortage. In order to curb the revolving door and the perpetual introduction of new inexperienced drivers, drivers need to be compensated more justly and equitably compared to other labor markets where overtime pay is not only expected, but also standard practice under the law. Why should transportation be exempt?

When we have a perpetual revolving door of trainees and new drivers, is that what we want – inexperienced truck drivers at the helm of an 80,000 pound rig? Here in Colorado, we had an inexperienced driver descending I-70 in April 2019 who claims he lost his brakes. His inexperience did not allow for him to utilize truck runaway ramps that could have saved the lives of four innocent victims, prevented the injury another six, while damaging 24 cars and four trucks. Our road safety demands that we shift the pay paradigm to ensure that experienced drivers are fairly compensated and thus retained. Motor carriers should praise this curb to nuclear verdicts as well.

Both global responsibility for environmental sustainability and our national security require a smarter business model. As an owner-operator, I always drove “as slow as possible, and only as fast as necessary” to maximize profits. The same holds true for minimizing emissions and reducing fuel consumption. If a driver is paid by the clock, then the incentive to whiz through construction zones, tailgating, driving aggressively in traffic, etc. all disappear. And that instills better driving behavior that will reap benefits far beyond what little gains can be had through advanced technologies.

Specifically, the ELD becomes the time clock for both pay purposes and hours of service regulatory compliance, in unison. When the driver is in the sleeper berth, then the pay-clock is stopped. For all other lines, “on-duty,” “driving,” and “off-duty, not driving,” the driver should get paid.

Also, as part of my scheme, drivers would be paid an hourly rate for on-duty, not driving. For any workweek in which that aggregate of driving + on-duty hours exceeds 40 hours, then the hourly rate is overtime. And for any week, in no event shall the combined driving + on-duty + off-duty pay be less than the minimum wage plus overtime, as applicable.

The way I envision this is: As long as the driver is responsible for the rig, whenever a driver is away from home or not asleep, he/she is at work, ready and able to work and is entitled to get paid.

Here’s why: while driving, it’s traditionally been to go as hard and as fast as possible because one’s earnings were predicated on how many miles in a day one could travel. Often this was too fast, too dangerous, too aggressive and too stressful for the driver. “On-duty” now becomes a payable period, so detention at a loading dock will cost the carrier, which in turn will financially motivate wasteful detention reduction. No longer will drivers solely bear the burden of detention while the carrier gets a free variable labor cost.

Lastly, “off-duty, not driving” will encompass those historical periods where the driver awaits the next dispatch (sometimes for days); now the carrier must pay the driver to sit and wait, through no fault of his own, while the dispatcher seeks to locate the next load.

Albert Einstein said that “doing the same thing over and over and expecting different results” is the definition of insanity. Our current transportation business paradigm has failed America and its hard-working professional drivers.

The mega-fleets have done everything possible to perpetuate the driver shortage as a disguise for their own ineptitude to address a problem that they (with Congress’ help) created. It’s overdue to deliver a more equitable, just, effective solution to the truck drivers who keep America rolling.

Making small changes to tweak the current business model is like repositioning the chairs on the deck of the Titanic; we need a wholesale restructuring akin to Deregulation in 1980. 

Alec Costerus is President of Colorado-based Aerodyne Transportation, LLC, an over-the-road long-haul trucking company hauling freight throughout North America; and is co-founder of Alpha Drivers Testing & Consulting, a consulting firm specializing in optimizing drivetrains for owner-operators and fleets. He is the immediate past-Chairman of the Trucking Solutions Group, a peer-to-peer group of owner-operators who collaborate on trucking business and regulatory matters. He can be reached at [email protected]

A leading advocate for professional drivers with more than a million miles under his wheels throughout North America, Alec Costerus is Vice President of Alpha Drivers Transportation. Additionally, he is co-founder and director of Alpha Drivers Testing & Consulting, a transportation industry educational provider, technical advisory, and business consulting firm, in which capacity he is an Administrator of the industry-leading Volvo Truck Masters and Mack Anthem Truck Masters, and related Facebook groups. He holds dual B.S. degrees in Chemical Engineering and Geology from Tufts University and completed an Executive Program in Finance at University of Virginia’s Darden Business School.