Paying Truck Drivers Overtime Doesn’t Do What You Think It Will.
We’ve seen a bunch of new writing about overtime in the last few weeks. See “Overtime bill for truckers gets it right” and “Women of Trucking Advisory Board’s final meeting sparks FLSA debate” and “Truck drivers sound off on a bill that could give them overtime” and finally “Bipartisan bill introduced to guarantee truck drivers overtime pay“
There are heated opinions on every side, not a surprise when talking about who is paying or receiving wages. They all, however, seem to be making some assumptions that simply are not true.
They all, however, seem to be making some assumptions that simply are not true.
It really boils down to this. By paying time and a half for hours over 40 in a week – driver pay will increase. I get why people may think that. If there is a premium on the rate and the hours are the same then higher rate X, same hours, would equal more wage. But that’s not what will happen.
Let’s look at an example. Truck Driver gets 50 cents per mile for 2400 miles and it takes 60 hours to complete. That’s $1200 per week for 60 hours or $20 per hour. So if the driver gets time and a half on those 20 hours over 40, they would get $800 for the first 40 hours ($20 x 40 hrs) and then $600 for the over-time ($20 x 20 hrs x 1.5) for a total of $1400. Yes, $1400 is more than $1200. Math is math. But is there anything in the law suggesting that the trucking company cannot lower the wage per hour as long as it is above minimum wage?
Is there anything in the law suggesting that the trucking company cannot lower the wage per hour as long as it is above minimum wage?
What every trucking company will quickly figure out is that if 60 hours is the norm (it also works with 70 or 80 hours). At that time they will need to drop the rate so paying the overtime premium will result in $1200 for the 60 hours. With a quick calculation, $17.14 per hour for 60 hours with the last 20 hours at time and a half comes to $1199.80. Done and done. Everyone will have this figured out before any law or executive order can get to the books.
So, then what? Now the driver has to work the 60 hours as the good wage doesn’t start until after the first 40 hours. Further, the company will get wise on the OT hours and cut them where they can, lowering pay to the driver. Not an ideal outcome to be certain.
What does a truck driver do with this? The driver can choose to only work for a company that treats them fairly, however the driver chooses to define what is fare. The huge signing bonuses indicated in “The Truth about Trucking Turnover,” was never really true, but sign-on bonus are not a reason to move anyway. (Hint: retention bonuses are better) As a driver, you can find a trucking company that values what you value and spend your career there. Is it pay? Retirement? Health Insurance? That’s up to each driver to decide. The bright side is that the relationship between the trucking company and its drivers does not have to be adversarial. In fact, long term success is a result of collaboration rather than conflict among those involved.
Still want to know more about overtime? Read the article to the right or the video above to learn if you should pay overtime. Contact us if you have any questions!
Written by Mike Ritzema
Before founding Superior Trucking Payroll Service, Mike was the CFO of a trucking company with 80 trucks and a thriving brokerage. This experience gave him the perspective that a payroll solution has to make the lives of the office people better. All the solutions he has designed are to benefit everyone. Our company mission is to help trucking families and that includes the company owners, the drivers, and the office.