Watch your step

Broker abuse is an unfortunate part of the trucking industry. While it might be easier said than done, the easiest way to avoid being a victim of a shady broker is never to do business with one in the first place.

Of course, once you’ve cleared the hurdle of finding a partner you can trust comes another daunting task – reviewing and signing the broker-carrier agreement.

As government affairs advocacy counsel for the Owner-Operator Independent Drivers Association, Paul Torlina has seen his share of contracts. During a recent episode of Land Line Now, Torlina discussed some of the “unfavorable terms” that drivers should be on the lookout for when it comes to a broker-carrier agreement.

At the onset, Torlina stressed the conversation was a “discussion of issues” rather than legal advice and said that drivers should seek outside counsel if they are unsure when it comes to their contracts.

One of the first “landmines” Torlina said drivers should be leery of is contracts with automatic renewals. While he acknowledged they might be good for some, this kind of contract can create issues for trucking companies dealing with a broker they want to part ways with.

Due to unclear timeframes, short windows to cancel and possibly needing to give advance notice that you won’t be renewing the contract, these provisions may lock you in with a broker you don’t want to deal with for another contract year if you fail to meet the criteria.

Torlina said another “more concerning” red flag for carriers is contracts with provisions that “allow a broker to offset against a carrier whenever they have a claim for cargo damage, equipment damage or anything along those lines.”

According to Torlina, these types of provisions circumvent the Carmack Amendment – which regulates the relationship between shippers and the owners of the cargo – meaning brokers can recover the cost of lost or damaged freight against what they owe a carrier without allowing the carrier to dispute the total cost.

Another provision that Torlina said is in nearly every broker-carrier agreement he reads is one that waives the carrier’s right to any documentation that is available to the broker. This is an issue he noted OOIDA is “fighting at the FMCSA level.”

The Association has been vocal for decades regarding the lack of broker transparency in the industry and formally petitioned the agency to take action to correct the issue in 2020. FMCSA was expected to publish a notice of proposed rulemaking to address it in June 2023, but that timeline has been pushed back into October of this year.

Denying trucking companies access to this documentation not only creates uncertainty when it comes to rates but also can make things difficult in the event there is a damage claim to the cargo or equipment. Without access to proper documentation, carriers could find themselves paying for someone else’s mistake.

When it comes time to sign the agreement, Torlina said the best first step is to have an attorney read over the contract and flag any unfavorable terms.

Carriers can then try to negotiate those terms out of the contract. But Torlina acknowledged this is easier said than done.

“In the real world, these brokers will tell you in one second to get lost if you want to negotiate those agreements or negotiate out provisions that are not favorable to them,” he said. “So if you’re unable to do those things, you have to be proactive on your own.”

As for how drivers can be proactive when dealing with their broker, Torlina said owner-operators can help safeguard themselves against abuse by:

• Being aware of all unfair provisions in the agreement
• Documenting as much as possible
• Requesting documentation through legal demand letters

Of course, nobody needs to navigate the business of trucking alone. OOIDA provides its members with a legal demand form template that can be completed online at the Association’s FightingForTruckers.com website.

Additionally, the OOIDA Foundation has put together a number of useful online videos designed to help truckers navigate the broker-carrier relationship. LL