Regulations

On March 27, 2020 President Trump signed the Coronavirus Aid, Relief, and Economic Security Act. The CARES Act, as it’s commonly known, is a $2 trillion bill that offers financial support to unemployed persons, small businesses, and large businesses in particular. But how is this bill going to affect the trucking and transportation industry?

How CARES Affects Owner Operators

For those who would be able to work, but are no longer able due to the coronavirus outbreak, Unemployment Insurance Provisions include an additional $600 per week payment to each recipient for up to four months, and extend benefits to self-employed workers, independent contractors, and those with limited work history. “That means, in trucking terms, any leased or independent owner-operators who loses work can draw the new federal unemployment benefits through the end of July.”

While the wording of the law is designed to be generous, it will depend on whether the government believes that many truck drivers are rendered unable to work while the coronavirus is continuing to spread. In general, truckers are working longer hours than ever, and there’s an increasingly high demand for truckers that are available to move freight. The majority of Americans will receive the $1,200 Economic Impact Payment, regardless of their current employment status.

Another bill helping owner operators, the Families First Coronavirus Response Act (passed prior to the CARES Act) – requires trucking companies to provide two weeks of paid sick leave to employees who contract COVID-19. “They don’t have to test positive for the virus. Rather, if they experience symptoms and are seeking a medical diagnosis, employers are required by the law to provide two weeks of paid sick leave, up to $511 a day, or $5,110 for a two-week period.”

What is the Economic Impact Payment?

According to the CARES Act and well-described by an e-book by ATBS, The Economic Impact Payment is designed as a 2020 refundable tax credit claimed on a taxpayer’s 2020 tax filings. The checks going out are effectively an advanced payment of a tax credit for 2020.The tax credit will be reconciled to the payment received when filing your 2020 tax return. If you file your tax return as a single citizen, your credit will be $1,200. If you are Married Filing Jointly, your credit will be $2,400. Additionally, each Qualifying Dependent Under Age 17 that is on your tax return will net an additional credit of $500. In order to receive the payment, you must be an American citizen or resident alien, you must have a Social Security Number (includes children), and you cannot be eligible to be claimed as a dependent.

For many taxpayers, this credit will make a significant impact on their immediate earnings and help them through the extra expenses that may arise from surviving the pandemic. As mentioned above, Unemployment Insurance has been bolstered, which means that truckers who lost their jobs due to the outbreak will be better able to live their lives with income closer to that of their previous wage before their job was lost.

How the Bill Affects Businesses

The CARES Act brings great news for small and large businesses, offering between $350 – $500 billion to help keep businesses of different sizes afloat. America is currently at over 10% unemployment, so these new provisions have come in just in time, making it easier for businesses of different sizes to continue paying their employees while their storefronts may be closed. For companies with under 500 employees, the federal government is offering tax credits and $350 billion for small businesses to apply for loans that can be partially or fully forgiven. For businesses that employ more than 500 people, a separate $500 billion is available.

How Fleets Should Operate Around the Loans

There are two types of loans available. The first is called the Paycheck Protection program, and it’s a loan available to smaller businesses, that delivers 2.5 times the amount of a business’ monthly payroll. These loans can be fully forgiven, if spent correctly— on payroll, rent, utilities, and Mortgage Interest. This is a great loan option for independent owner-operators, who in effect need to pay their own salaries. Best practice for sole proprietor owner-operators would be to use the loan to pay their own payroll and keep strict documentation so that the loan can be fully forgiven in the future.

The second type of loan is called an Economic Injury Disaster Loan, which offers loans of up to $2 million with a fixed low interest rate of 3.75%, coupled with a longer repayment period of up to 10 years. This loan requires collateral if the requested amount exceeds $25,000. If you’re looking to borrow a small amount of money for your business, Paycheck Protection Program Loans are superior in every way, as they always have the potential to be entirely forgiven, whereas Economic Injury Disaster Loans can only be forgiven for up to the first $10,000 borrowed, for the rest of the amount to be repaid over the loan period.

What Does This Mean For Trucking?

All of this is good news. Many freight companies have been able to continue operation throughout the pandemic, which means that financial losses will likely not exceed their cost of operation. With loans being available for all businesses at competitive interest rates, we shouldn’t see many freight companies going under any time soon. There are plenty of resources available for how to secure a loan for your business. If these new government opportunities aren’t enough, or you don’t apply, you can always look to a private financial service company like Mission Financial to help your business see it through these difficult times.

With the additional income from the Economic Impact Payment, truckers should be able to stay on the road long enough to deliver the vital food and supplies that the country is relying on. With one of the stipulations to loan forgiveness being that businesses need to keep their payroll at maximum capacity, semi-truck drivers working for freight companies as standard W-2 employees shouldn’t be worried about getting laid off any time soon.

Stay informed on the state of trucking in America by browsing our news page, updated frequently so you don’t miss any important updates!

The Drug and Alcohol Clearinghouse has been immensely controversial in recent months. Its goal is to keep the roads safer by holding drivers accountable for their past alcohol and drug-related infractions. Previously, drivers who failed a drug or alcohol test could easily gain employment shortly after with another carrier. This was due to a series of loopholes created by poor recording of these incidents. 

Finally, there is a system in place to prevent this, which will likely improve driver quality and keep our roads safer. Let’s get into the logistics of the Drug and Alcohol Clearinghouse.

What is the Drug and Alcohol Clearinghouse? 

The Drug and Alcohol Clearinghouse is a secure database that provides potential employers with details about the previous drug and alcohol infractions of any candidates. Put into effect January 6 by the Federal Motor Carrier Safety Administration (FMCSA), it will provide records of any commercial driver’s previous violations, so that they can be taken into consideration for a variety of quality standards. This information will not only be available to employers, but it will also be viable for review when it comes to the issuing and renewal of a commercial driver’s license. Law enforcement and substance abuse personnel can also use this information in the event that an infliction requires legal intervention. It also presents information about when a driver is suitable to return to duty. 

Why is This Database Necessary?

Alcohol and drug use are massive safety concerns for both drivers and the general public. There are many recorded incidents of drug and alcohol abuse severely impacting the judgment and performance of drivers and consequentially resulting in tragedy. The DOT authorizes urine tests, but when more detailed tests were conducted, the drug and alcohol issues throughout the trucking community were found to be more severe than we initially thought. While the electronic record-keeping might seem strict upon the first impression, it is an important measure to keep the roads safer. 

Is This Good News for Drivers? 

Privacy is a valuable thing, so it’s understandable that an online logging system might have some skepticism. In reality, this new system will actually benefit drivers in several ways: 

• Drivers will be able to register and query the database to view their own records for free

• The Clearinghouse will notify a driver, either by mail or email, any time there is information about him or her added, altered, or deleted

• Instead of using the driver’s Social Security Number, the Clearinghouse will categorize and store data by birthdate and CDL number

The only drivers who will have any cause for concern with this new database are drivers who are intending on committing drug and alcohol violations in the future. Because the system was only effectively put into place in January, any past inflictions will not be entered into it. The Drug and Alcohol Clearinghouse extends to all commercial vehicle operators, including School Bus Drivers, Limo Drivers, and Construction Equipment Operators. Any employee operating under FMCSA functions must comply with Clearinghouse regulations. 

How Employers Are Being Affected

This new system not only affects drivers, but it also affects carriers and other potential employers. Employers will have to add an extra step to their hiring process and modify the way they maintain safety records. According to the Department of Transportation, 

• “Employers will conduct pre-employment queries on prospective employees and if drug and alcohol violations are identified, those employees will be prohibited from performing safety-sensitive functions, until successful completion of the return-to-duty (RTD) process;
• Employers will query the Clearinghouse annually for each driver they currently employ, and if drug and alcohol violations are identified, those employees will be prohibited from performing safety-sensitive functions until successful completion of the RTD process.”

New Technology Continues to Change the Trucking Industry

Previously, drivers with unsafe drug and alcohol histories could easily lie about their records, especially if they crossed state lines to apply for their new position. This database closes up that massive loophole that was posing a safety and efficiency risk for the public and the trucking industry. Overall, drivers have nothing to worry about as long as they’re safe and sober when on-duty. 

To find out more about how technology is changing the trucking industry, check out our blog today!

California is doubling down on its efforts to get older trucks off the road. The California Air Review Board (CARB) has been a formidable force in truck and bus regulation in the state, setting a strict set of laws that took effect in 2012, which most notably, set restrictions on the age of semi-truck engines fit for transport. In 2017, there were 80,000 heavy-duty trucks registered in California that were out of compliance with diesel regulation laws. In 2020, that number is estimated to have been reduced to 50,000, but CARB is continuing to close in on the trucks that are still out of compliance.

New Legislation

A new law has been put in place to suspend DMV registration of trucks that don’t meet CARB’s guidelines for emissions, which include minimum standards for particulate matter filters. Cost is a major reason that drivers avoid meeting the standards, which will eventually mandate that every truck entering the state has a 2010 model year engine or equivalent. Many semi-truck drivers had chosen to gamble with operating non-compliant vehicles, in the hopes of skirting the Air Resources Board enforcement arm altogether. This law should rope in the last batch of recalcitrant operators, as driving a truck without registration is hardly feasible.

What This Means for Drivers

Should the law work as intended, it would result in a significant number of owner-operators being forced to spend the money it takes to make their rig compliant, or leave trucking altogether, contributing to the national driver shortage. That being said, there are plenty of resources for finding the capital needed to bring a semi-truck up to standard. CARB offers grants for truck drivers, as well as links to financial incentives on their website.

It should be emphasized that CARB’s environmental guidelines apply to all semi-trucks entering in the state, with temporary passes for out-of-date trailers now being fully discontinued. As a result, it may be a good time to consider trading up to a new, cost-saving model now, when restrictions are just being put into effect and not likely to increase for a significant amount of time.

What This Means for Dealerships

It’s likely that the increasingly strict guidelines for efficiency are contributing to the decline in used truck sales, which are down as much as fourteen percent. New trucks and trailer-service industries could see a boom in the coming year however, with every new batch of trucks that falls out of compliance with guidelines every year. It’s possible that used trucks may not all be defunct as well. With the demand for used semi-trucks in decline, there’s potential for the cost-efficiency of retrofitting these vehicles to be on the rise. Dealers with access to a well-trained shop team familiar with CARB guidelines might consider purchasing used trucks on the cheap, with the intent of bringing them up to date and selling them to value-focused drivers.

Some Good News for Owner-Operators

Pressure has been relaxing in some areas, however. Trailer regulations set to take effect on January 1 of this year have been postponed for at least two years, giving manufacturers time to bring their products up to the new standards, which has the potential to positively impact trailer prices in the future. The changes largely mirror new federal greenhouse gas trailer regulations, which generally concern reducing weight and drag from trailer models. The U.S. Environmental Protection Agency is currently precluded from enforcing the federal standards however, as a case against the changes has reached the court of appeals in Washington D.C. This should give owner-operators some breathing room when it comes to upgrading their equipment.

A special exception for California in the Clean Air Act of 1963 makes it the only state with the authority to set its own regulations. They would be set to enforce GHG trailer standards, but for trailer manufacturers inability to meet CARB’s stringent guidelines in time for enforcement. The suspension is set to be lifted on January 1, 2022, and CARB will continue their work to vet and approve manufacturers in the meantime.

What to Expect Moving Forward

CARB has been clear about its intentions moving forward. GHG regulations for trailers won’t be moved up in timeframe, and manufacturers will get six months’ notice before trailer standards are enforced. California has only tightened its regulations on diesel emissions in recent years, however, and it’s unclear as to whether the current appeal to the EPA that’s paused federal trailer regulation will affect California’s special case for self-regulation. In general, it’s best for drivers to expect enforcement of environmental emission regulations and do the best they can to outfit their vehicle properly if they plan on operating in California. Dealers should look to stay ahead of the curve when it comes to the demand for new semi-trucks and adjust to the declining demand for used semi-trucks accordingly.

Whether you’re a driver that needs help with financing, or a dealer looking to expand your business, look towards Mission Financial to help you find the capital you need. Visit our blog to stay up to date with trucking regulations as they continue to develop.

You may have been hearing the buzz about a new bill that is rocking the transportation industry. Assembly Bill 5 has been a massively controversial development for both carriers and drivers. For years, the trucking industry has made a name for itself as a place where independents and entrepreneurs can thrive, but many industry experts are saying that this bill threatens the nature of that current model. Assembly Bill 5, also called the “Employees and Independent Contractor” bill, or simply AB5 essentially reclassifies employees who may have previously been able to call themselves independent contractors. 

Recently, it was decided that truckers would be granted a preliminary injunction from the California Trucking Association to cease the enforcement of AB5. While it might not necessarily be affecting us immediately, it’s important to read up on the potential outcome if the current pardon is lifted. This is especially important since the injunction may or may not be final. 

Many big employers in the transportation industry choose to classify their workers as independent contractors. This was previously a bonus for workers, as there was increased flexibility for hours and hauls. Companies such as Uber Freight have been providing increased opportunities for drivers while also increasing the pool of potential drivers to combat the nationwide shortage. The enforcement of reclassification will greatly impact how these companies structure their hiring policies. Before we dive into that, let’s nail down the details of the actual legislature. 

The Basics of the Bill 

Back in September, the bill was signed by the governor of California, Gavin Newsom. It was described as being “necessary and important” for the workers of the area. The intended purpose is to protect workers from being deprived of benefits and other perks that full-time employees are entitled to. If an employee is technically working full time for a carrier, while still technically being classified as a contract worker, the company isn’t obligated to provide them with the benefits of a traditional full-time employee. 

This legislation includes a strict basis for the rules of independent contracting. This is called an “ABC” system. First off, (A) the worker is free from the control and direction of the hiring entity; (B), the worker performs work that is outside the usual course of the hiring entity business; and (C), the worker is customarily engaged in an independently established trade, occupation, and business. If a worker fits all of these requirements, they are eligible to be considered independent. This is a much more restrictive system than the one previously in place. It is also the hiring entity’s responsibility to enact these standards, not the responsibility of the employee. 

Controversy and the Impact on Drivers and Carriers

This bill would impact the trucking industry severely, as a massive percentage of drivers fall into the category of independent, and they usually also sell their services to carriers, whose main business is transportation. This puts independent truckers in the category of being inside the usual course and disqualified from part B of the ABC system. 

So, while the intent of this bill was to get benefits for those employees, many industry experts disagree and argue that these restrictions on independent employees are actually going to severely harm employment levels and driver quality of life. If carriers and employers are forced to start employing people full time that they were previously only contracting, it’s going to be much more expensive for them. This is expected to cause a significant dip in employment opportunities for California drivers since carriers and companies will be hiring less and overall being more selective about who they hire. 

This bill could be especially impactful for the trucking industry since California is a huge state for the industry, as it has countless massive ports and facilities. It’s generally a big hub, and previously many drivers have flocked there for these opportunities. Now, industry professionals are not so sure that this trend will continue, as the opportunities might become less plentiful. It is likely that some of the smaller, less stable companies and a large number of owner-operators based in California will not survive this legislation, or at least be forced to relocate to outside of the state of California. 

What to Expect Moving Forward  

So now we’re all wondering “what’s next?” While we will have to wait and see how legislative bodies respond in the long run, and in the meantime, there are a few things that we know going forward. There was a hearing on January 13th that extended the restraining order granted for truckers against AB5 that was temporarily put in place back in December. The injunction was technically won by advocates from the transportation industry, but there will be a final court case in the upcoming months to reach a final conclusion. The timeline of this process is still up for debate. While the trucking industry is safe for now, many are still left guessing about the future of their business models. 

The transportation industry is a complicated tapestry. Fortunately, we are here to provide clarity and to keep you up to date with all of the latest news and updates. If you’re looking to get involved in the industry, Mission Financial can help you get started!