The New Broker Surety Bond Requirements Are In Effect Today
This past year, the Federal Motor Carrier Safety Administration has been hard at work. Yesterday, we discussed how their investigation into sleep apnea led to a unanimously approved bill from Congress. This means that if they want action to combat sleep apnea among truckers it is necessary for them to follow strict regulations and not just guidelines.
They had already enforced the HOS regulations prior to that - and we all know how that was with the trucking industry.
Today is the day for trucking brokers to experience the FMCSA. This time, however, their rulemaking and policy changes actually work in the truckers' favor.
What is a surety bond?
We'll explain what all this means for those who don't know. In order to become a trucking broker, you needed to have a minimum $10,000 bond. This minimum bond requirement was in effect before 1980 so it is arguably not new. It was easier for "bad brokers", to meet the bond requirements, and for still stiff truckers to do the work they did.
The surety bonds are industry-wide protection for truck drivers against fraudulent brokers. Brokers will often enlist the services of truckers to transport a vehicle for their customers, but fail to pay them until the shipment has been completed. These brokers are often called "bad brokers". The $10,000 surety bond that the broker must pay is meant to protect truckers from being bribed by bad brokers.
In these times, $10,000 isn't nearly enough. The maximum amount a bond company can pay to a stiffed trucker is $10,000. This amount is often paid for by attorney fees.
What can you do to help with new requirements?
It is hoped that by raising the bond requirement, bond companies will be more selective and scrutinize more applicants for bonds. They can make sure that brokers who request the bond (and pay a minimum of $75,000) do not abuse it. This will allow them to treat truckers fairly by paying what they owe.
All interstate brokers and freight forwarders, which includes all auto transport companies that broker their services, must also register with the FMCSA. They must have paid their minimum bond payment of $75,000. In order to be eligible for registration, they must also have met the minimum bond payment. Failure to register with FMSCA will result in a $10,000 civil penalty or fine.
It sounds big, and it is. It seems that it was put in place to protect our nation's truckers. No broker can dispute that. The FMCSA has announced a 60-day phase-in period that will begin on Oct. 1. This allows the industry to take its time and prepare for its new bond.
The FMCSA will mail notices to brokers and freight forwarders who have not met the $75,000 minimum bond requirement by Nov. 1. They have 30 days to pay their bond before they are revoked by the FMCSA.