Wal-Mart has recently made headlines due to a settlement in California regarding truck driver pay. If the settlement stands, could truck driver compensation models change throughout the entire industry?
Wal-Mart Truck Driver Pay Settlement
A federal jury has decided that Wal-Mart intentionally failed to pay hundreds of truck drivers in California. The jury awarded over $54 million in damages to the 850 current and former truck drivers.
The court concluded that the retail giant did not comply with California minimum wage laws and pay drivers properly for activities including pre- and post-trip inspections nor their federally mandated 10-hour off-duty period.
It is important to note that Wal-Mart is in line with standard industry truck driver pay practices. Most carriers do not pay their drivers for their off-duty time or the time spent on non-driving tasks, including inspections.
Wal-Mart maintains that they are in compliance with the California laws in regards to workers being paid minimum wage for all hours worked. “We strongly believe that our truck drivers are paid in compliance with California law and often in excess of what California law requires,” Randy Hargrove, a spokesperson for Wal-Mart stated.
According to the corporate giant, Wal-Mart’s drivers are among the best paid in the industry. They claim drivers averaging between $80,000 and $100,000 annually. The company will likely appeal the verdict, as one of Wal-Mart’s attorneys stated that the jury was given wrong instructions.
This case will be carefully monitored because the ruling could set a major precedent for other carriers in the state.
Hourly Pay Chatter
Back when the Department of Transportation (DOT) was still working on the second iteration of the Grow America Highway Bill, there was a proposed amendment regarding truck driver pay.
The proposed mandate would require carriers to pay drivers at least the rate of federal minimum wage for non-driving work periods. Some of the activities that could be covered would include pre- and post-trip inspections or detention time spent at shippers and receivers. This mandate was eventually cut from the highway bill that did end up passing.
However, the attention that the proposed amendment received created a conversation with different parties weighing in on the issue. With Wal-Mart required to pay nearly $55 million to truck drivers in California, it seems that this issue may be yet again, brought to the forefront.
Organizations like the Owner-Operator Independent Driver’s Association (OOIDA) are in support of an hourly truck driver pay model to compensate drivers for all hours worked. On their website, the OOIDA discusses their legislative agenda. One of the things they list is to “remove truck drivers’ exemption from the Fair Labor Standards Act (FLSA) requirements for overtime pay and promote hourly compensation for employee drivers.”
Could the end result in the Wal-Mart settlement case set a precedent for other carriers? Will we see fleets give hourly truck driver pay for non-driving activities? If not hourly, are there other truck driver pay models that may fairly compensate drivers for all hours worked?
Alternatives to Hourly Pay
Detention time is a non-driving activity that some drivers get paid hourly. Is this the same pay method that should be applied across the industry? Hourly pay could greatly impact the trucking industry and lead to less productivity. A trip that usually takes 8 hours could turn into a 9 or 10-hour drive. In an hourly model, the longer the trip takes, the more money that a driver can make. So if it is not hourly pay that truck drivers should receive, what other truck driver pay methods are there?
If the fair-labor exemption for trucking is repealed, what sort of truck driver pay models could the trucking industry see in the future? One method is to pay drivers based on productivity or activity. This sort of method compensates drivers per route based upon the miles and the stops on the trip.
This method is the best in terms of productivity. No matter how long the trip takes the driver, they will earn the same amount of money. Fleets that switched to a productivity-based truck driver pay model saw immediate increases in productivity. This model seems to compensate drivers fairly and create an incentive for drivers to work more efficiently.
Will we see the fair-labor exemption for trucking overturned in the near future due to the Wal-Mart ruling? Will Wal-Mart win an appeal and not have to pay their drivers? Is there a solution to the truck driver pay woes facing our transportation industry? We aren’t quite sure, but we’re certain we’re going to following this story as more details are available.