The Federal Motor Carrier Safety Administration developed the Drug & Alcohol Clearinghouse to provide employers and other officials with real-time information regarding a person’s information regarding violations involving impaired driving or failure to complete DOT programs after a violation.
It’s been several years since the Clearinghouse came out, and it’s become a key tool for DMVs, DOT inspectors, employers, and freight factoring experts. It’s especially important when issuing a commercial driver’s license or commercial learner’s permit as it prevents people with substance abuse issues from getting behind the wheel.
The Importance of the FMCSA Drug & Alcohol Clearinghouse
The FMCSA’s Clearinghouse reports the following as a violation:
- A positive drug test.
- BACs of 0.04 or higher for any drug that’s not prescribed by a medical practitioner.
- Consumption of alcohol within four hours of driving, loading a trailer, or completing other safety-related tasks like safety inspections.
- Refusal to submit a drug or alcohol test.
- Use of alcohol at any point within eight hours of getting into an accident.
Employers can use this information before hiring a driver. Permit and licensing agencies in each state can use the information to determine if a person is eligible for their CDL or CLP. It also helps freight factoring companies determine risk before paying an advance on a load that’s being picked up.
While a driver should report past violations or failure to comply with drug and alcohol programs, it doesn’t always happen. If a driver lies on an application, it can damage your company.
In 2019, a commercial truck driver killed seven motorcyclists. Part of the problem was that delays kept an impaired driving offense in one state from getting reported in another. It also came out that the owners of the trucking company falsified records and that one owner knew there were prior violations.
The Clearinghouse is designed to keep situations like these from happening again. The first set of rules helped states with the interchange of information. The most recent rules make the information accessible to many important people.
The First Clearinghouse Rules
With one big clearinghouse that’s accessible to every state agency, employer, and freight factoring companies, it’s easier to get updated information on offenses.
Several years ago, the first set of rules regarding the clearinghouse came out. They stated that all employers must check their driver’s records once a year. They also must run a check on all prospective and new employees.
The first rules also made it mandatory that employers, substance abuse professionals, medical review officers, and other parties report all violations to the Clearinghouse. Everything from a positive test result to knowledge of a violation must be reported.
It also established criteria that drivers need to meet before gaining permission to return to duty. This includes setting up a testing plan and completing any required drug and alcohol programs.
The Second Clearinghouse Rules
As of November 2024, a new set of rules went into effect. One of the biggest was to allow state agencies access. Employers can also sign up for real-time notifications alerting them when a driver’s record is updated.
Before a DMV or state licensing agency can issue, renew, or transfer a CDL, they must check the Clearinghouse. If someone is prohibited due to a violation, that person’s driving records must be removed with the status changed to “Prohibited” until the driver completes the requirements to return to duty.
With these restrictions and background checks, it’s harder for a driver to hide their violations from employers. It also aids roadside inspectors and law enforcement professionals with valuable information. FMCSA can also verify that employers are staying in compliance.
The Impact of the Clearinghouse on Freight Factoring
The Clearinghouse rules also impact freight factoring arrangements. Go back to the story where the driver killed multiple motorcyclists. Theoretically, a freight factoring company could have lost a lot of money if they’d chosen to pay for the load at the time it was picked up. After the crash, the company filed for bankruptcy. Recovering any advanced funds becomes difficult when there’s a bankruptcy.
Because of this, freight factoring companies carefully check several things before approving an advanced payment. They look at your client’s business credit report. If the client has a long history of late or missing payments, a factor is unlikely to approve a payment request. There’s too much risk. The same is true if you have a driver who has a number of violations or, worse, is driving with a suspended CDL.
As a business owner, waiting for a payment is tough. It’s why so many trucking companies rely on freight factoring for immediate payments and a strong cash flow. Learning that there’s a problem with your driver isn’t something you want to discover. That’s why your hiring practices require a check of the Clearinghouse.
This can make it harder to find talented drivers. It’s a tough market, and you need a competitive salary and benefits package. Our tips ensure you have money coming in every week.
It’s also important that you check your driver’s records every year. Failure to do so can be catastrophic. You need time to take care of the required background checks and verification measures. When you eliminate invoicing and collections from your office administration’s list, they have more time to take care of these essential work duties.
Strategies You Can Use to Manage Your Business Wisely
Freight factoring takes care of invoicing and collections for you. That’s one of the many benefits you gain. Instead of taking stacks of bills of ladings each week or month and entering the information into your accounting software, the factoring company does it for you.
Your freight factoring company takes the bill of lading you or your driver submits and approves it for payment. You get money within a couple of days if not the same day. You receive an invoice that you can upload to your bookkeeping software.
The factoring company also keeps track of paid invoices. If your client doesn’t pay on time, the factor makes follow-up calls with your client to see where the payment is. That’s hours of work you don’t have to do each month.
With the steady flow of cash from same-day payments, you have the money needed to pay drivers and office workers on time. You avoid late fees and penalties for unpaid bills. Your workers are happier, and you gain a solid team to help you with your business.
Another benefit is that without the late fees and unpaid bills, your credit score increases. You stop relying on high-interest business credit cards. As your credit history improves, you receive better rates on business loans. Plus, some states allow insurance companies to use your credit score when determining insurance rates. If your business isn’t in one of these states, a lower credit score can lead to expensive truck insurance rates.
- California
- Hawaii
- Maryland
- Massachusetts
- Michigan
- Nevada
- Oregon
- Utah
Saint John Capital offers low freight factoring rates and beneficial services like free business credit checks and business lines of credit. We help trucking companies succeed. Fill out the free online form to learn more about our freight factoring arrangements.
