Trucking Industry Advised To Audit All Drivers To Limit CDL Liability

By John Gallagher of FreightWaves,

Trucking and logistics companies should be taking immediate steps to mitigate increased exposure to drivers with non-domiciled commercial driver’s licenses – including an audit of all existing employee or contract drivers, a regulations expert advises.

That advice, included in a legal alert by Greg Reed, a partner at Hanson Bridgett LLP, comes in the wake of an emergency rule issued in September by the Federal Motor Carrier Safety Administration overhauling who is eligible for a non-domiciled CDL.

“Both the regulatory language in FMCSA’s interim final rule, as well as Secretary Duffy’s remarks at the press conference announcing it, cast doubt on the legitimacy of all non-domiciled CDLs,” Reed told FreightWaves in an interview.

“If that holds true, the liability and risk has already increased dramatically for any carrier using these drivers or a brokerage that works with those carriers.”

In the alert, Reed points out that if an accident were to occur, plaintiffs’ attorneys would likely argue that logistics and trucking companies are on notice that non-domiciled CDLs may be operating unlawfully and are insufficiently qualified.

“And non-domiciled CDL holders may find their licenses revoked in real time as the DOT and SDLAs conduct audits of current non-domiciled CDLs, which could result in a driver behind the wheel who lacks a commercial license.”

Steps that both trucking and logistics companies should be taking now, according to Reed, include:

• Audit all existing employee or contract drivers to determine whether any are holding non-domiciled CDLs. Logistics and brokerage companies should engage with frequently used carriers to determine the scope of their exposure to non-domiciled CDLs.
• Work with legal counsel to determine how to assess whether identified employee or contract drivers have the sufficient records to demonstrate that their CDLs will not be revoked based on ongoing and forthcoming audits.
• Begin a process to limit utilization of these drivers until they have their non-domiciled CDLs confirmed or renewed.
• Incorporate new or reinforce existing contractual language making clear that drivers must be properly licensed, have a lawful employment status, and qualified to operate a commercial motor vehicle.

Looming capacity shakeout

The heightened restrictions now governing eligibility for a non-domiciled CDL prompted FMCSA to estimate that 194,000 of approximately 200,000 drivers holding those licenses will exit the market over two years as their CDLs become ineligible, representing roughly 5% of 3.9 million commercial drivers.

“Even though the regulatory language suggests that there will be a 5% reduction in capacity over two years, which it asserts will allow markets and fleets time to adjust, I potentially foresee capacity tightening to a greater degree over a shorter amount of time,” Reed told FreightWaves.

“While carriers are not necessarily going to let their non-domiciled CDL drivers go today, there will be pressure to immediately start phasing them out of the workforce. A carrier or broker is not going to want to expose themselves to the increased liability that comes with not knowing if these non-domiciled CDLs were validly issued in the first place.”

Some on Wall Street see the capacity attrition – and subsequent effect on rates – resulting from the CDL rule as “likely far more impactful” than the agency’s recent crackdown on English language proficiency violations.

“Capacity action, while meaningful, is mainly a late ‘26/early ‘27 tailwind for the trucking group in our view,” wrote TD Cowen transportation analyst Jason Seidl in a research note following the emergency rule announcement.

“Enforcement is unlikely to be a material help for ‘26 bid season (upcoming imminently in late ‘25/early ‘26) but could begin to firm up spot rates in time for the following ‘27 bid cycle barring a deep economic slowdown. That said, upcoming capacity attrition should be on shippers’ minds this bid season, which could lead to attempts to pull forward some bids.”