Hotshot Commission Pay for Owner-Operators

This page calculates pay. It does not hire anyone.

Hotshot, in ordinary freight talk, is a pickup or a medium truck pulling a short flatbed, gooseneck, or wedge trailer, usually with one or a few pieces of freight that a dry van is a poor fit for. Commission pay is a way of splitting the money on that freight. It is not a roster of carriers, not a list of cities, and not a sign-on bonus. If you landed here looking for a seat, this is the wrong document. Nothing below is an opening, a recruiting pitch, or a promise of weekly gross.

Owner-operators ask for "the hotshot percentage" the way they ask for a diesel price, as if one number sat on a government site. It does not. The Electronic Code of Federal Regulations tells a carrier and a lessor how the pay method must be written down. It does not fill in the blank. Recruiting pages and forum threads fill in blanks all the time. Those are not primary sources, and this draft does not launder them into a rate. If a lease you are holding states a percentage, that lease is your number. If it does not state one, you do not have a commission deal yet, no matter what a recruiter said on the phone.

Two different deals both get called commission

The first deal is a lease onto an authorized carrier. You own the truck, and often the trailer. The carrier's operating authority covers the load. You are the lessor. The carrier is the lessee. Part 376 of title 49 requires a written lease, with the provisions in 49 CFR 376.12, except where subpart C exempts the arrangement. The carrier pays you for the equipment and for driving. When people say hotshot commission in this setting, they mean the carrier keeps a share of the revenue and pays you the rest as a percentage. The regulation allows that shape. It also allows a flat rate per mile, a rate that changes with direction or commodity, or any other method the parties actually agree to. Percentage is a choice, not the only legal pay.

The second deal is your own operating authority. You are the motor carrier. You, or your dispatcher, book the freight. The shipper or the broker pays on your invoice, or pays a factor that bought your invoice. A "commission" in this setting is usually the fee you pay a dispatcher, often described as a percentage of the linehaul you billed. That fee is not a 376.12 lease percentage. The carrier is not paying you a cut of its revenue. You are paying someone to help you run your authority. Mixing the two sentences is how people compare a lease settlement with a dispatch invoice and think they are the same math. They are not. The comparison of running under someone else's authority versus your own is own authority versus leasing on. The regulatory text of the lease rules, in longer form, is FMCSA truth-in-leasing. This page only uses those rules to show the pay formula.

Hotshot does not get a special pay statute. A hotshot tractor-trailer combination leased to a carrier is equipment under the same lease rules as a Class 8 tractor, when those rules apply. A hotshot carrier with its own MC number is a motor carrier under the same broker and agent rules as a van fleet. The freight is smaller and the deadhead can eat a week faster, which changes whether a given percentage is livable. It does not change the formula. Livability after fuel, insurance, and the truck note is the profitability guide linked above, not a percentage this page is willing to guess.

The formula, with the percentage left blank on purpose

Write the lease percentage as P. P is a fraction the lease states. This page does not know P. Write the revenue base as B. B is the dollars the lease says P applies to. On many hotshot leases people intend B to be the linehaul only: the freight charge for moving the piece, not the fuel surcharge, not detention, not a lumper, not a truck-ordered-not-used fee. On other leases B is gross revenue for the shipment, which can include those extras. 49 CFR 376.12(d) says the amount may be expressed as a percentage of gross revenue. It also says any other agreed method is allowed. So "percentage of gross revenue" is one lawful sentence, and "percentage of linehaul only" is also a lawful sentence if that is what the addendum says. The unlawful sentence is a percentage that is not written down before the trip.

Pay before charge-backs equals P times B. That is the commission math. It is not a take-home number. Net settlement equals P times B, minus each charge-back the lease allows, each computed the way the lease says to compute it. Charge-backs are not a secret second percentage. 49 CFR 376.12(h) says the lease shall clearly specify all items that the carrier may pay first and then deduct from your compensation, together with a recitation of how the amount of each item is computed. You must be given copies of the documents needed to check that the charge is real. A line on a settlement that says "fees" with no lease clause and no backup is not a completed formula. It is a number you cannot audit.

The carrier's retained share, in a pure percentage deal, is the part of B that P does not pay you, plus any charge-backs that move more of the money back to the carrier, minus anything the lease says the carrier must pay on top, such as fuel the carrier agreed to eat. Do not shortcut that into "the company keeps the rest" until you know whether fuel, the factor, and insurance were inside the rest or were extra deductions. Two leases with the same P and different charge-backs are different jobs. Asking only for the percentage is how hotshot owners compare offers that are not comparable.

Linehaul, gross revenue, and the rated freight bill

Linehaul is the charge for the transportation itself. On a hotshot bill it might be a flat charge for a machine, a skid of parts, or a pickup load of building material, rather than a long van linehaul. Fuel surcharge is a separate line when the bill bothers to separate it. Detention, layover, extra stops, tarps, and permits can be still other lines. Gross revenue for the shipment is whatever the rated bill treats as the total revenue of that shipment, which may be linehaul plus those lines. Your percentage applies to the base the lease names. If the lease is silent, you do not get to assume the friendlier base, and the carrier does not get to assume the smaller one. Silence is a drafting failure under 376.12(d), not a default you should drive on.

When your revenue is based on a percentage of the gross revenue for a shipment, 49 CFR 376.12(g) requires the lease to say that the carrier will give you, before or at settlement, a copy of the rated freight bill. For contract carriage, the carrier can use another document that contains the same information a rated freight bill would. The carrier may black out shipper and consignee names. The point of the copy is so you can see the revenue your percentage was applied to. Without that paper, a settlement that shows only your share is an answer with the problem missing. You cannot test P times B if you are not allowed to see B.

The same subsection says that, regardless of how you are paid, the lease must let you examine the tariff or, for a contract carrier, the documents the rate was computed from. Only the portions that match what would be on a rated freight bill have to be disclosed when the rate comes from a contract. That right matters on percentage pay more than on a pure mileage rate, because your pay moves when the billed revenue moves. It still matters on mileage pay when you are checking whether accessorials you earned were billed at all. Hotshot owner-operators get short-paid on permits and detention more often than they get the percentage wrong. The freight bill is how you see the miss.

What the market charges per mile for hotshot freight is a different question, and it moves. Use hotshot trucking rates per mile for that discussion. This page does not copy a rate from it and then multiply by a made-up percentage. A high linehaul with a narrow base can pay less than a modest linehaul whose percentage also covers the fuel surcharge. You only know which one you have after you read B.

Who pays fuel, and what empty miles do to a percentage

49 CFR 376.12(e) requires the lease to clearly specify the responsibility of each party for the cost of fuel, fuel taxes, empty mileage, permits of all types, tolls, ferries, detention and accessorial services, base plates and licenses, and any unused portion of those items. It also says who loads and unloads, and what pay if any is due for that work. There is no federal default that "the owner-operator always buys the fuel" or that "the carrier always buys the fuel." Hotshot recruiting sometimes talks as if there were. The lease is the default. If the lease says you pay fuel, fuel is your cost even when your pay is a percentage of linehaul. The percentage did not include a fuel card unless the lease says it did.

If the carrier advances fuel and the lease puts fuel on you, the advance is a candidate for a charge-back under 376.12(h). The lease has to say that this item may be deducted and how the amount is computed. A pump price plus a markup is a computation only if the markup rule is written. You get the receipts. If the lease says the carrier pays fuel, a fuel deduction on the settlement contradicts the lease. That is not a negotiating style. It is a failure to perform the lease provision the regulation says shall be adhered to.

Empty mileage is called out in the same paragraph because percentage pay usually does not pay it directly. Your percentage is of loaded revenue, unless the lease creates a separate empty-mile rate. The miles from the last receiver to the next hotshot pickup burn fuel, tires, and hours. On a short hotshot haul, the empty leg can be as long as the loaded leg. The percentage did not shrink. The unpaid miles grew. 376.12(e) forces the lease to say who bears that empty cost. It does not force the carrier to pay you for it. If you are leased on and the lease is silent, do not start the truck. If you are on your own authority, empty miles are yours by definition, and a dispatcher's percentage of loaded linehaul does not reimburse them unless your dispatch contract says so.

Fuel taxes and base plates follow the same clause. A hotshot truck that crosses state lines can owe fuel tax under the agreement you have with the carrier, or under your own IFTA license if you are the carrier. This page does not calculate a tax. It only says the lease must assign the cost. Tolls and ferry charges are the same kind of line: assigned in writing, then either included, reimbursed, or deducted in the way the writing describes.

Who pays the factor

A factor buys a freight bill and advances most of it, then collects from the broker or shipper. The factor's fee is the price of that advance. No section of 49 CFR 376.12 sets that fee, and this page will not invent one. The regulatory question is only who is allowed to take the fee out of whose money.

On a lease, the authorized carrier is the one the customer hired. The receivable is the carrier's unless your paperwork says something unusual and lawful. If the carrier factors that receivable, the factor fee is the carrier's cost of cash flow. It becomes your cost only as a charge-back. 49 CFR 376.12(h) then does all the work: the lease must name the factor fee as an item that may be deducted, say how the amount is computed, and give you the documents that let you check it. A settlement line that deducts a factor fee the lease never mentioned is not "how commission works." It is a deduction the rule does not bless. How factoring itself operates, as a product, is how factoring works. Use that guide for the mechanics. Do not import a sample fee from memory into this calculation.

On your own authority, you are the motor carrier on the invoice. If you sign a factoring agreement, you pay the factor, because you sold your receivable. The dispatcher does not pay the factor unless your contracts say the dispatcher is in that money, and you should not want that casually. FMCSA's June 16, 2023 guidance treats a dispatch service that takes compensation from the broker or the factor, or that sits in the monetary transaction between broker and carrier, as activity that indicates broker authority is required. Paying your dispatcher yourself, from your revenue, under a written contract, is the other direction. The factor fee and the dispatch fee are two different contracts even when both are described as a percentage. One is financing. One is labor. Neither percentage is supplied by this page.

Quick pay from a broker is not factoring, and it is not a commission split. It is the broker paying its bill faster for a discount. If you are leased on, that discount belongs in the same conversation as charge-backs: who agreed to the discount, and does the lease let it reduce B before your percentage, or reduce your settlement after. If you have your own authority, the discount reduces the money you collect. Read the rate confirmation before you accept the quick-pay box. This page still will not quote a quick-pay percentage, because brokers publish their own schedules and they are not one number.

When the percentage has to be paid, and what you must be shown

49 CFR 376.12(f) requires the lease to specify that payment to the lessor is made within 15 days after submission of the necessary delivery documents concerning a trip in the carrier's service. The documents the carrier may demand before it pays are limited to the logs the Department of Transportation requires and the documents the carrier needs to secure payment from the shipper. The carrier may ask for more documents. It may not make those extra documents a prerequisite to payment. Payment may not be contingent on a bill of lading to which no exceptions have been taken. The carrier shall not set time limits for you to turn in the required delivery documents. A hotshot fleet that waits until the broker pays the carrier, and only then starts a 15-day clock, is using a clock the regulation does not describe, unless the "documents necessary to secure payment" genuinely were not submitted. The rule is tied to your submission of those papers, not to the broker's mood.

Final pay at the end of the lease can be held until you remove and return the carrier's identification devices, or certify that a lost device was removed. That hold is in 376.12(f). It is not a reason to hold every weekly commission check. During the lease, 376.12(l) also requires a copy of the lease on the equipment, unless a statement allowed by 376.11(c)(2) is carried instead, and you keep a copy. The pay addendum should be with that copy. If the percentage lives only in a recruiter's text message, you cannot settle a dispute from the cab.

Charge-back documents and the rated freight bill are the two packets that make a percentage settlement checkable. One shows B. The other shows each deduction and the math. Keep both with the settlement. On a hotshot week with several short loads, each trip has its own B. A single weekly "commission" number that is not tied back to each freight bill is not enough to prove P was applied. Ask for the trip-level sheet. The regulation's purpose, visible in the text, is that the lessor can see how the money was built.

Insurance charge-backs and escrow, still without a premium

49 CFR 376.12(j) requires the lease to specify the carrier's legal obligation to maintain public liability insurance under FMCSA rules and 49 U.S.C. 13906. The lease must also say who provides other coverage for the leased equipment, and the regulation gives bobtail insurance as the example. If the carrier will charge any of that insurance back to you, the lease shall specify the amount charged back. That is one place the regulation does demand a figure, and the figure has to be in your lease, not in a blog. This page will not substitute a premium. Cargo or property-damage deductions have their own sentences in the same subsection: the conditions must be specified, and the carrier must give you a written explanation and itemization before any such deduction is taken.

Escrow is optional, but if the carrier requires it, 49 CFR 376.12(k) requires the lease to state the amount, the items the fund can be applied to, an accounting, your right to demand an accounting, and interest while the carrier holds the fund. The interest floor is the average yield on 91-day Treasury bills from the weekly Treasury auction, paid at least quarterly. The regulation does not print this week's yield, so this page does not either. At the end, the escrow comes back no later than 45 days from termination, after deductions the lease already allowed, with a final accounting. An escrow labeled "commission reserve" that never returns is not a feature of percentage pay. It is a missed clause of 376.12(k).

49 CFR 376.12(i) says you are not required to buy products, equipment, or services from the carrier as a condition of the lease. If you do sign a purchase or rental contract that lets the carrier deduct payments from your compensation, the lease has to state those terms. A hotshot "company trailer program" deducted from commission is lawful only inside that structure. It is not automatically part of P times B.

None of this decides employee versus contractor status. 49 CFR 376.12(c)(4) says the control language in the lease is not intended to settle that question. Compliance with 49 U.S.C. 14102 can be consistent with an independent-contractor relationship. It is not a holding that every percentage-paid hotshot driver is self-employed. Tax treatment of the settlement is 1099 versus W-2 trucking. Do not let a commission label do the classification work.

When the commission is a dispatch fee on your own authority

FMCSA's final guidance, Definitions of Broker and Bona Fide Agents, was published at 88 FR 39368 on June 16, 2023. The notice says it does not have the force and effect of law and is not meant to bind the public. It is the agency's reading of definitions that already exist. The guidance says there is no statutory or regulatory definition of a dispatch service. It then separates activities that generally fit a bona fide agent from activities that indicate broker authority is required.

The regulation the guidance relies on, 49 CFR 371.2(b), defines bona fide agents as persons who are part of the normal organization of a motor carrier and perform duties under the carrier's directions pursuant to a preexisting agreement which provides for a continuing relationship, precluding the exercise of discretion on the part of the agent in allocating traffic between the carrier and others. The guidance says "allocating traffic" means any exercise of discretion in assigning a load to a motor carrier. If an entity represents more than one carrier and exercises that discretion, it does not meet the bona fide-agent definition and needs broker authority. A hotshot dispatcher who shops one load across several of its clients is in that sentence. A dispatcher whose written job is only your truck is easier to square with the definition, which is a legal fact, not a recommendation to hire anyone.

On pay, the guidance is direct and still does not set a percentage. Factors that point away from needing broker authority include a written contract appointing the dispatch service as agent, the dispatcher going through a broker rather than soliciting shippers, and the dispatcher receiving compensation from the motor carrier under that contract rather than from the broker, a third-party logistics company, or a factor. The guidance also lists, as a factor, that the dispatch service is an IRS Form 1099 recipient from the motor carrier, or a W-2 employee, as the contract specifies. Factors that point toward broker authority include negotiating with the shipper, taking compensation for a load from the broker or the factor, arranging freight with no written contract, accepting a load with no truck and then finding a truck, and allocating a load among multiple carriers.

So the own-authority formula is simpler than the lease formula, and less regulated. Your linehaul, meaning the revenue base your dispatch contract names, times the percentage that contract states, is what you owe the dispatcher, unless the contract uses a flat fee or some other method. You still pay fuel, because you are the carrier. You pay the factor if you factored the bill. You do not deduct those from the dispatcher's percentage unless the dispatch contract says the percentage is of a net figure. Read the contract for the base the same way you would read a lease. A dispatcher who quotes a percentage of "the load" has not told you whether the fuel surcharge is in the pot. Get that in the writing. This page still will not supply the percentage. Carriers and dispatchers set it in their own contracts, and the Federal Register notice above does not pick one.

Handling money between a shipper and a motor carrier strongly suggests broker authority, the guidance says, but it is not the only factor and it is not essential. A hotshot owner who lets a dispatcher collect the broker's payment and peel off a commission before remitting the rest has walked into that factor even if everyone calls the arrangement dispatch. The cleaner structure in the guidance is that the carrier is paid, and the carrier pays the dispatcher. That is also the structure that keeps the factor relationship between you and your factor, not between the dispatcher and your factor.

How to read one hotshot settlement without trusting a slogan

Take one completed trip, not a weekly blend. Find the rated freight bill or the contract-carrier equivalent. Mark the linehaul. Mark every other charge: fuel surcharge, permits, detention, extra stop, tarp, toll reimbursement. That list is the menu of possible bases. Open the lease addendum or the dispatch contract and mark which of those lines are inside B. Multiply by the written P. That product is pay before charge-backs. Then list every deduction on the settlement and find the lease clause or contract clause that allows it and states the computation. Fuel you owe, a disclosed factor fee, an insurance charge-back whose amount is specified, a trailer rental that 376.12(i) required the lease to describe, and an escrow deposit that 376.12(k) required the lease to describe, are different lines. They are not one "company percentage."

If a deduction has no clause, it is not part of the formula. If B is not on the paperwork, the percentage cannot be checked. If fuel is deducted and the lease says the carrier pays fuel, the settlement is wrong even if the percentage line is right. If you are on your own authority, repeat the exercise with your dispatch contract and your factor statement as two separate sheets. Do not subtract the factor and call the result the dispatcher's commission, or the reverse.

After you can do that for one trip, you can ask whether the business works. That question needs your real fuel, your insurance premium, your truck payment, and the rates you actually bill. Those inputs are yours. The profitability guide discusses the business question. The rates guide discusses what freight pays. This guide stops at the pay calculation. It does not rank carriers, it does not list jobs, and it does not publish a commission percentage, because no primary source opened for this draft states a hotshot split that would be honest to print as "the" rate.

Frequently Asked Questions