Proposed Amendments: Motor Carrier Freight Payment Protections (2025)

Section 1 — Legislative Findings and Purpose

1. The Legislature finds that, in the modern electronic freight marketplace, brokers routinely receive proof of delivery and bill shippers immediately upon completion of transportation.
2. Brokers commonly delay payment to motor carriers by conditioning the start of the payment period on receipt of a carrier-generated invoice, despite already possessing the documentation required to bill the shipper and secure its own payment.
3. This practice creates an artificial payment delay that:
   • Transfers financial risk from brokers to carriers,
   • Forces carriers to rely on quick-pay programs and factoring services,
   • Erodes carrier financial stability, and
   • Negatively impacts highway safety by increasing economic pressure on motor carriers.
4. The purpose of this proposal is to ensure timely payment to motor carriers, eliminate abusive payment practices, and recognize the broker’s role as a custodian—not owner—of carrier compensation.

Section 2 — Broker Fiduciary Duty

1. Any freight broker or freight forwarder arranging transportation by a motor carrier shall be deemed a fiduciary with respect to funds owed to the motor carrier for transportation services rendered.
2. Funds collected from a shipper that are attributable to carrier compensation:
   • Shall be deemed in trust for the benefit of the motor carrier, and
   • Shall not be considered the property of the broker or freight forwarder.
3. A broker or freight forwarder shall not delay, withhold, or condition release of carrier funds for any purpose unrelated to lawful transportation charges. Motor carriers are required to maintain insurances for all acceptions.

Section 3 — Mandatory Payment Timelines (Invoice-Independent)

1. A broker or freight forwarder shall remit payment to the motor carrier no later than seventy-two (72) hours after the broker or freight forwarder receives funds from the shipper into its account that are attributable to the motor carrier’s transportation services.
   
   This obligation applies regardless of whether the broker has received, accepted, processed, or approved a carrier invoice.
2. In addition, a broker or freight forwarder shall remit payment to the motor carrier no later than thirty-one (31) calendar days after completion of delivery, as evidenced by the broker’s receipt of proof of delivery and/or other delivery confirmation customarily used to bill the shipper.
   
   This obligation applies regardless of whether a carrier invoice was transmitted, received, or deemed “correct” by the broker.
3. Any contract term or practice that attempts to delay the start of the payment period until receipt of a carrier invoice is void and unenforceable.

Section 3A — Paperwork Disputes Not a Basis to Withhold Payment

1. No broker or freight forwarder may withhold, delay, or reduce payment based on alleged paperwork defects, administrative submission issues, portal usage issues, or documentation format issues.
2. If the broker asserts that additional documentation is needed for its internal processing, it may request such documentation, but payment shall be made within the timelines set forth in Section 3.
3. Nothing in this Section limits lawful claims related to cargo loss, damage, or shortage, provided such claims are pursued through lawful claim procedures and are not used as a pretext for late payment.

Section 4 — Prohibition on Non-Transportation Compensation and Deductions

1. A rate confirmation, broker-carrier agreement, or any related document shall not:
   • Offer compensation for non-transportation services; or
   • Reduce agreed transportation compensation based on non-transportation requirements.
2. Prohibited non-transportation services include, but are not limited to:
   • Tracking or check-in requirements,
   • Paperwork submission timing or “paperwork turnaround,”
   • Proof-of-delivery transmission speed,
   • Portal usage requirements,
   • Administrative or clerical tasks unrelated to the physical movement of freight.
3. Any deduction, fee, chargeback, penalty, or rate reduction tied to such requirements, or tied to paperwork processing, shall be void and unenforceable.

Section 5 — Interest and Penalties for Late Payment

1. Any payment not made within the timelines set forth in Section 3 shall accrue interest at a rate of:
   • 0.5% per annum (0.005%),
   • Calculated as simple interest,
   • Compounding daily,
   • Beginning on the first day after the payment deadline.
2. Interest shall be payable to the motor carrier automatically and shall not require a demand or notice.
3. Failure to remit accrued interest constitutes an additional violation.

Section 6 — Safety and Public Interest Determination

The hope is that the Legislature finds that timely payment to motor carriers:

1. Improves carrier liquidity and financial stability,
2. Reduces reliance on high-cost financial products,
3. Decreases economic pressure that contributes to unsafe operating practices, and
4. Directly promotes highway safety and continuity of commerce.

The requirements of this Act impose no undue hardship on brokers or freight forwarders, as payment is required only after funds have already been received or reasonable delivery-confirmation time has elapsed.