Part 376 of the federal motor-carrier rules is a lease-content and lease-performance statute for owner-operators who lease equipment to a federally authorised for-hire carrier in the United States. On the settlement side it requires, among other things: payment within fifteen days of the necessary delivery documents; itemised charge-backs with the documents needed to check them; a copy of the rated freight bill when pay is a percentage of gross revenue; written explanation before cargo-damage deductions; and, if escrow is collected, ongoing accounting plus return of the remainder within the period the lease names, with an outer bound of forty-five days from termination. It does not set the fraction you are paid, and it does not apply to every driver who receives a 1099.
Who this part actually covers
The rule applies to a written lease of equipment by an authorised motor carrier, with exemptions set out in the same part. The practical test for this page: you own (or hold) the tractor, you lease it to a federally authorised for-hire carrier, and you are paid as a lessor, not as an employee on a W-2. Company drivers, and many independent contractors who do not lease equipment to the carrier, are outside this part even if they are paid on a 1099. The contractor-versus-employee guide in this set covers the document you receive; this page covers a set of lease rights that may sit underneath it.
The rule is about what the lease must say and what the carrier must actually do. A generous-looking settlement that the lease never authorised is still a problem. A stingy settlement that the lease authorised and the rule’s process was followed is a rate problem, which this site does not referee. Confirm that your arrangement is the kind of lease the part covers before you quote it at the office; quoting it at a relationship it does not cover wastes the first letter.
Payment period: fifteen days, and what “documents” means
The lease has to specify that payment is made within fifteen days after submission of the necessary delivery documents for the trip. The documentation the carrier may require before you can be paid is limited: log books required by the Department of Transportation, and the documents the carrier needs to secure payment from the shipper. The carrier may ask for more documents, but not as a prerequisite to payment.
Payment may not be made contingent on a bill of lading with no exceptions taken. The carrier also may not set time limits for you to submit the required delivery documents. Those two sentences are the part of the rule that kills “we will pay you when the customer pays, and only if the BOL is clean, and only if you turned it in within forty-eight hours.” Paid-when-paid can still exist as a commercial term in some relationships; it cannot be dressed up as a document prerequisite this part forbids.
On termination, the carrier may withhold final payment until identification devices are removed and returned, and a letter certifying removal satisfies the requirement if a device was lost. That withhold is a holdback with a named condition, covered on the final-settlement guide in this set. It is not a right to keep the money.
The freight bill, when pay is a percentage
When compensation is a percentage of the gross revenue for a shipment, the lease must specify that the carrier will give you, before or at the time of settlement, a copy of the rated freight bill — or, for a contract carrier, the document actually used that contains the same information that would appear on one. Regardless of the method of compensation, the lease must permit you to examine the tariff, or the relevant portion of a contract, from which rates and charges are computed. Shipper and consignee names may be deleted.
This is the document the percentage-pay guide in this set tells you to ask for. The rule is why the ask is not a favour. If the packet regularly arrives without it, that is a performance failure of the lease, not a filing you forgot.
Charge-backs, insurance, and cargo deductions
Charge-back items — things the carrier pays first and later deducts from your compensation — have to be specified in the lease, together with how each amount is computed. You are to be given the documents needed to determine whether the charge is valid. The chargebacks guide in this set is the evidence dictionary; this paragraph is the reason that dictionary is not optional.
The lease has to say you are not required to purchase or rent products, equipment or services from the carrier as a condition of the lease. If you do enter a purchase or rental that lets the carrier deduct from compensation, those terms have to be in the lease. A truck-payment deduction that cannot be traced to that kind of term is a deduction looking for a home.
Cargo or property-damage deductions need a written explanation and itemisation, delivered to you before the money comes off. “Claim pending” on a statement, with the money already gone and no itemisation, is the sequence run backwards.
Escrow: accounting during, return after
If escrow is required, the lease has to specify the amount, the items it can be applied to, how transactions are accounted for (on each settlement sheet, or by a separate monthly accounting), your right to demand an accounting at any time, how interest is handled if the lease provides for it, and the conditions for return. At return, permitted draws are only those already specified, with a final accounting. The fund is to be returned no later than forty-five days from termination.
The escrow guide in this set is the running-balance dictionary. The final-settlement guide is the close-out packet. This page is the federal reason both of those packets exist for the relationships this part covers. A carrier that will not account, or that returns a remainder late, or that invents a new draw category on the way out, is failing a performance obligation of the lease, not a courtesy.
What this part does not do
It does not set your fraction, your per-mile figure, or your fuel-surcharge table. It does not decide whether you are an employee. It does not replace a state wage-payment statute that may also apply, and it does not replace the terms you actually signed. It is a floor on disclosure and on a handful of timing and document rules.
Enforcement is its own question, and it is not a help-desk. Document the miss — the date the documents went in, the date payment was due, the itemisation that never arrived, the escrow accounting you demanded — and then use whatever combination of the carrier’s dispute process, a lawyer, and the agencies that actually oversee motor-carrier leasing you and your counsel decide is worth it. The shortage guide in this set is the paper-trail half of that. This page is the list of things the paper trail is supposed to be able to point at.
FAQ
What is truth in leasing for owner-operators?
A federal rule (49 CFR Part 376) that requires certain terms in the equipment lease between an authorised US motor carrier and an owner-operator, and requires the carrier to perform them. On settlements that includes a fifteen-day payment period, itemised charge-backs, a rated freight bill when pay is a percentage of gross, and escrow accounting and return.
Does truth in leasing apply to every 1099 driver?
No. It applies to a lease of equipment to a federally authorised for-hire carrier, with exemptions in the same part. Company drivers, and many contractors who do not lease equipment to the carrier, are outside it even if they receive a 1099. Confirm the arrangement before you quote the part.
How soon does a carrier have to pay a leased-on owner-operator?
The lease has to specify payment within fifteen days after submission of the necessary delivery documents. The documents that may be required before payment are limited, payment may not wait on a clean bill of lading, and the carrier may not set a deadline for you to turn the required documents in.
When must escrow be returned under truth in leasing?
After permitted draws that were already specified in the lease, with a final accounting, and in no event later than forty-five days from termination. You are also owed an accounting of transactions during the lease, either on each settlement or monthly, and you may demand one at any time.
Can a carrier deduct a cargo claim before explaining it?
The lease has to specify that a written explanation and itemisation of a cargo or property-damage deduction is delivered to the lessor before the deduction is made. Taking the money first and explaining later is the sequence the rule does not allow.
Related guides
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