Owner-Operator Lease Pay: Lawsuit Says Load Values Were Hidden

What happened

An owner-operator lease pay lawsuit was filed in federal court in Michigan on Sept. 17. FreightWaves reported on it Thursday, Oct. 1.

About 50 owner-operators sued Red Line Logistics, a carrier based in Sterling Heights, Michigan. Their leases said they would get 80% of each load's revenue. The carrier would keep 20%.

The drivers say they were shown lower load values than customers really paid. The complaint gives an example. The carrier got $10,000 for a load, but the driver was told it was worth $7,500. The driver's 80% was then figured on the smaller number.

The suit says the real numbers sat in one computer system drivers could not see. A second system showed the drivers the lower numbers. It also says settlement statements hid the real amounts.

The drivers are asking for more than $1 million. These are claims, not court findings. The company had not filed a public answer when the story ran.

What it means for owner-operators

If you are leased on and paid a percentage, your pay is only as honest as the number it is based on. If that number is wrong, every check is short. You may never notice.

Federal truth-in-leasing rules help you here. Under 49 CFR 376.12, a percentage-pay lease must promise you a copy of the rated freight bill. The rated freight bill is the paper that shows what the customer was charged. You get it before or at the time you are paid. The carrier may black out the shipper and receiver names, but not the money.

The same rule says the lease must list every charge-back. A charge-back is a cost the carrier pays first and then takes out of your pay. The lease must explain how each one is figured. You can ask for the papers that prove them.

This story is about a carrier in Michigan. But the rule covers leased owner-operators in Texas and across the country.

What to do next

• Read your lease. Find the line about the rated freight bill. If it is missing, ask why.
• Ask for the rated freight bill on every percentage load. Compare it to your settlement.
• Keep your rate confirmations, bills of lading and settlements together for every load.
• If the numbers do not match, ask in writing and keep the answer.
• Check every charge-back against the list in your lease.
• Leased on? Know what covers you when you are not under dispatch. Read about bobtail and non-trucking liability insurance.
• See our trucking insurance coverage guide for the rest of your policy.