Distinguishing Brokers or Bonafide Agents

Going into 2023, dispatchers will have more guidance from the Federal Motor Carrier Safety Administration about whether they could or should refer to themselves as brokers or bona fide agents.

This topic and these definitions have been murky over the last few years, which is why the agency has tried to clarify matters as well as seek public comment from members of the industry about what they think.

Interim Guidance Published in the Federal Register

In late November, the FMCSA published interim guidance in the Federal Register which fills in some, but not all, of the current gray areas related to broker-bonding and similar regulations in the industry.

Additional guidance is expected next year, based on feedback from the November updates. The agency has been collecting comments throughout 2022 and will continue to accept them until Jan. 17th.

Infrastructure Investment and Jobs Acts

The involvement from the agency on this topic came as a result of the Infrastructure Investment and Jobs Act, which became law in 2021. Part of the act included more attention to how technology has impacted and possibly changed the industry and if any rules or guidelines need to be adjusted.

For instance, dispatch services have gone from relying on radios and phones to internet-based systems as well as mobile apps.

Dispatcher versus Bonafide Agents Defined

One item of importance was discussing if the role of the dispatcher has changed and if dispatch service duties needed to be updated or even reclassified. If they have, will new standards certifications be needed, as well as penalties for people performing certain tasks without these new certifications?

The largest issue was whether dispatchers should also be considered brokers if they’re involved in handling funds in transactions between motor carriers and shippers.

If dispatchers are considered brokers and given the role of official intermediaries between both groups, they should receive the official authority of a broker to conduct these transactions.

Many in the industry felt this larger title was important, and the FMCSA guidelines echoed this, saying that dispatchers do need this authority, especially if money is exchanged. However, the guidelines also say that exchanging money should be an absolute requirement for the role of broker.

This goes into the definition of a “bona fide agent,” who can represent more than one motor carrier, but may not necessarily have the role of a broker.

The agency generally said there might be specific situations where both definitions can apply, and full disclosure is important, especially if an agent is representing several carriers.

Independent Dispatch versus Carrier Representation Dispatch

Part of the vagueness – why guidelines are issued and not rules – is because there’s no firm and universal definition of a dispatch service.

Some dispatch services may try to remain independent and not represent a specific motor carrier, and are also not involved in connecting carriers and shippers, reserving this role for actual brokers.

Or in some companies, a dispatch services team may assist with some of their tasks and receive a percentage of their freight.

FMCSA Clarification

This distinction has led to the FMCSA to clarify that a dispatch service should not be considered a broker when it isn’t specifically involved in arranging freight or representing only one motor Carrier.

But on the other hand, if a dispatch service arranges transportation for more than one carrier or focuses on traffic, these are roles that should fall under a broker title and not a bona fide agent.

Want to find out if your dispatching can be compliant? Contact your account manager (800)-595-2615 or customerservice@pfaprotects.com