Samantha joined the Anderson Trucking Family in November of 2012 as a specialized driver manager and managed a fleet of mixed company and contractor drivers. In the spring of 2014, she transitioned to the driver administration department and began working in contractor services. While in contractor services, Samantha familiarized herself with all processes, procedures and information in regards to driver contracts, pay and settlements. She is currently the operations support manager and oversees both the contractor services department as well as the driver settlement department and leads both of her teams to ensure our drivers receive the highest level of service required to help navigate their accounts and settlements on a daily basis.
Why did you become a truck driver?
If you are like a majority of truck drivers, you did it for the pay. And while the reason you got into the industry isn’t solely because of pay (perhaps you enjoy the freedom of the road or you grew up with family members in the trucking industry), it’s likely at least one of your top reasons for staying.
Over-the-road (OTR) trucking is one of the highest-paying trucking gigs you can get. Now that you’ve landed a job with the trucking carrier of your choice, you need to figure out all the different ways you can get paid — especially because, in some cases, you can choose your pay structure.
If you don’t understand the difference between payment methods like cents-per-mile (CPM) and percentage pay, you may not choose the payment structure that will maximize your income based on your running style.
As the operations support manager here at Anderson Trucking Service (ATS), I crunch numbers and look at settlement checks all day. I’ve been in this role for nine years, so I have a good grasp on how the industry has changed over the years, and subsequently, the pay structure.
I’m going to tell you all about the different ways you can get paid as a truck driver so you’ll feel confident in making the best choice for yourself and you’ll easily understand your settlement checks.
But first, I’ll explain the difference between the pay structure for company drivers and independent contractors.
How Do Company Truck Drivers Get Paid?
Company drivers can be paid on a CPM basis or by percentage pay. Company drivers at high-paying carriers typically earn upwards of $135,000 per year.
Within company driver pay, there can be options for per diem. I’ll discuss this further, but per diem pay is non-taxed funds that pay for things like laundry, new uniforms and other things drivers may need over the road.
As long as you turn in your paperwork on time, you should receive a settlement check every week.
How Do Independent Contractors Get Paid?
Independent contractors can be paid by percentage pay or on a CPM basis. After fixed expenses, independent contractors can earn more than $170,000 per year.
Contractors are paid on a different time scale than company drivers. Each company is different, but because drivers are independent contractors, they can be paid every 24 hours, every 48 hours, weekly or biweekly. Be sure you ask your trucking carrier how often you’ll be paid.
What is Cents-Per-Mile (CPM) Pay?
Cents-per-mile (CPM) pay means that you are paid for each mile that you run. Currently, the market range is about 50 CPM. To give you an idea of how that calculates out, if you ran 400 miles in one day, you could roughly count on earning around $200 that day — not including detention or stop pay.
Company drivers receive CPM for both empty and loaded miles.
The CPM range you’ll be paid is dependent upon the company you work for, your trucking experience and your safety record. It may also depend upon how large of a load you can haul, so the more endorsements and experience under your belt, the better.
CPM is a more stable form of payment as compared to percentage pay, which depends largely on the fluctuating cost of freight.
What is Percentage Pay?
Percentage pay is based on what is being billed to the customer. The driver is owed a percentage of anything the carrier bills to the customer and the customer pays out.
Percentage pay includes the line haul cost (the cost of getting from point A to B). It can also include stop charges and special equipment charges. Special equipment charges include things like tarping a load.
Just like with CPM pay, the percentage you are paid is dependent upon the carrier, their safety score and their customers. Reputable, sought-after carriers may have access to the highest-paying freight and customers.
When you’re paid by percentage, your income can ebb and flow with the market. If freight rates are low, being paid by a percentage of the line haul cost might result in lower paychecks. When freight rates are high, you will see higher paychecks. There isn’t that safety net that there is with CPM pay.
What is Per Diem Pay?
Drivers should have the option to elect or opt out of per diem pay. This Internal Revenue Service (IRS) reimbursement allows fewer taxes to be withheld so drivers get more take-home pay to cover expenses on the road. Expenses include meals, uniforms and other supplies drivers need to complete their job.
Independent contractors can submit their records during tax time to receive per diem pay for all the days they were out on the road that year.
What is Stop Pay?
Stop pay occurs when drivers stop at another facility on their way to a load’s final destination. This happens if a driver has to stop somewhere in-between pickup at origin or the final drop at the destination to pick up an additional load or more equipment.
Consider a scenario where you’re loading out of a Minnesota warehouse and your final destination is in Texas. If you have to stop in Kansas to pick up more equipment, that is considered a stop and you would be paid for this. The rate of pay depends on the customer.
What is Detention Pay?
Detention pay is paid out any time a customer would hold up a truck or cause an unknown delay for you as the driver.
This may happen if you are waiting to get loaded at a facility because the item(s) happen to not be ready to load, or the loading crew is not available to load the item(s) onto or into the trailer.
Detention pay can be charged not just during loading and offloading at your origin and final destination, but during your stops too.
The trucking carrier typically bills the customer per hour for detention. If the customer elects to pay the detention fee (sometimes they don’t), that money or a percentage of the funds received is paid out to you.
The price paid out for detention pay is a case-by-case basis. Sometimes you will be required to adhere to a specific appointment or timeframe to pick-up or drop-off and if you don’t hit that deadline, you are not subject to detention pay.
What is Accessorial Pay?
Accessorial pay is any other charge that fits within an order that isn’t line haul pay. There is a long list of things carriers can charge the customer for, from tarping and tolls to unloading and loading fees.
Detention and stop pay can be categorized under the accessorial pay category.
Every carrier has a different bonus structure, so it’s important to ask your recruiter about it. You may be offered sign-on bonuses, referral bonuses or bonuses after you complete a lease term.
Which Pay Program Do I Choose?
As a truck driver, you won’t necessarily get a steady pay rate and see the same number on every settlement check. Your income will depend on how many miles you drive or the cost of the freight you’re hauling.
Sometimes companies have both CPM and percentage pay programs and you can pick which program you’d like. You should receive the program details in writing so that you can make an informed decision.
Sometimes there is only one payment structure choice or you are required to go with a specific choice based on whether you are a contractor or company driver.
Keep in mind that if there are two payment program options, you should be able to switch if you don’t feel successful with one program. This doesn’t mean that you can switch back and forth between payment programs when the freight market changes, but if you do feel you need to make a change, you should get that option. You should be able to talk to your carrier about what your revenue could look like on each pay program and together you can decide if a switch is the best move.
When you choose CPM versus percentage, consider how many miles you run. Do you run a lot of miles? If so, you should choose CPM to maximize your income. If you run low miles, choose percentage pay.
If you are an independent contractor, you will tend to have a little more choice about which loads you haul. You can speak with your dispatcher about which loads to take to make you more profitable. It isn’t always about taking one load that has a huge payout. You also have to factor in whether or not you can get a load out of that area or if you’ll be stuck waiting for freight.
Keep On Trucking!
When you are determining whether you’d like to try out the CPM program or percentage pay, make sure you talk to your carrier about transparency. Your trucking carrier should be transparent about pay. You should have access to freight bills (the bill that is sent to the customer). That way, you can see exactly what the customer is being billed for and what you are subsequently being paid.
And once you do start with a carrier, look closely at your settlement checks. It should detail everything you are being paid for. If you are confused about a settlement check, call. The financial department should be able to break everything down for you and explain it clearly.