FAQ: What Is a Trucking Sign-On Bonus? (And How To Calculate It)

By Indeed Editorial Team

November 25, 2021

It's common to see companies offer sign-on bonuses in the trucking industry. Hiring managers often use these bonuses as an incentive to encourage candidates to apply for jobs. If you work as a truck driver or are considering pursuing a career in this industry, then you may benefit from learning about these bonuses. In this article, we explain what a trucking sign-on bonus is, explore why companies offer it, share tips to help you calculate and review sign-on bonuses carefully and provide an example to help you get started.

Related: Top 12 Trucking Companies To Work for (And How To Become a Driver)

What is a trucking sign-on bonus?

A trucking sign-on bonus is a monetary incentive hiring managers provide to new employees. They typically offer potential job candidates a specific amount of money if they accept a position and agree to the company's terms. The amount of money a company offers for its sign-on bonus may vary, but usually exceeds $1,000. The company may choose to pay this amount when the employee first starts working for them or after they meet certain conditions.

Related: Sign-On Bonus: Definition and Negotiation Tips

Why do companies offer trucking sign-on bonuses?

Many companies choose to offer trucking sign-on bonuses to attract new drivers. While offering a large sign-on bonus may seem like an extreme measure to take, it's a common technique that many hiring managers use as a part of their recruitment strategy. This is partially due to the need to replace those who are planning to exit the labor force.

While the Bureau of Labor Statistics (BLS) predicts the number of available heavy and tractor-trailer truck driver positions to increase by 6% between 2020 and 2030, they also state that companies need to replace the growing number of employees who retire and transfer to other occupations. According to the BLS, this may result in approximately 231,100 openings per year. Offering sign-on bonuses is just one of the many tools HR managers are using to fill these roles.

Related: 14 Reasons To Become a Truck Driver (Including Tips)

Tips for reviewing trucking sign-on bonuses

Here are some tips to help you review each trucking sign-on bonus offer you receive to ensure you choose the best one:

  • Determine when you're eligible to receive the sign-on bonus. While many trucking companies offer sign-on bonuses, most of them don't pay the full amount upfront. Instead, they may pay your sign-on bonus in installments over a set period.

  • Assess payout contingencies. Companies may also pay sign-on bonuses in installments based on performance. For example, you may receive a certain percentage of your sign-on bonus after you drive a set number of miles or hit a key performance metric.

  • Identify your starting pay. Make sure you understand what your base salary is so you can determine whether the sign-on bonus is worthwhile. Research what other truck drivers with your level of experience earn and compare it with your job offer.

  • Read the fine print. Take the time to carefully review your hiring contract to identify what the company's conditions are and make sure you can meet them. This can help you ensure you receive your full sign-on bonus.

How to calculate a trucking sign-on bonus

If you're determining whether to accept a trucking sign-on bonus, you may want to compare your current annual salary with how much you could earn in a new role. Here are some steps you can take to calculate what a trucking sign-on bonus is worth and determine whether it makes sense for you to accept it:

1. Calculate the base pay

Start by determining what you can expect to receive for your base pay. Some trucking companies list an annual salary, while others pay truck drivers a flat rate for every mile they travel. If the company you're applying for pays its drivers per mile, you can use the following formula to calculate your annual base pay:

Annual base pay = (amount of pay per mile) x (average miles per week) x (52 weeks)

2. Add the base pay and sign-on bonus together

Next, add your annual base pay with your sign-on bonus. Use the following formula below to determine how much you can expect to earn in your first year of employment:

First-year earnings = (annual based pay) + (sign-on bonus)

Make sure you review your hiring contract carefully to ensure you can meet the necessary requirements to earn your sign-on bonus within your first year of employment.

3. Compare with your current earnings

Finally, compare the total yearly earnings you could receive if you accept the job offer with your current annual salary. You can use the formula below to calculate the difference between these wages:

Wage difference = (current annual salary) - (first-year earnings)

Then use this information to determine whether you would make more or less than you currently do in your first year of employment if you accept the new positions.

Related: A Guide to High-Pay Trucking Jobs

Example of how to calculate a trucking sign-on bonus

Here's an example of how to calculate a trucking sign-on bonus to help you get started:

Johnathan receives an offer to work as a truck driver for PHL Trucking Company. The offer letter he receives includes a $1,500 sign-on bonus in addition to a base pay of $0.33 per mile. To collect the $1,500 sign-on bonus, Johnathan has to work for PHL Trucking Company for one full year. Johnathan currently works for Heavy Trucking LLC, where he earns $0.37 per mile. He uses the following calculation to assess the difference between the base pay each company offers:

($0.33 per mile) - ($0.37 per mile) = -$0.04 per mile

If Johnathan takes the job at PHL Trucking Company, his base pay decreases by $0.04 per mile. However, Johnathan wants to know if the sign-on bonus makes up for this difference after the first year. He determines that he drives an average of 2,500 miles per week. There are 52 weeks in a year, so Johnathan uses the following formula to calculate how much he gets paid per year at his current job:

($0.37 per mile) x (2,500 miles per week) x (52 weeks) = $48,100 per year

Johnathan realizes he earns approximately $48,100 per year working for Heavy Trucking LLC in his current role. Next, he uses the formula below to assess how much he would make in his first year working at PHL Trucking Company:

($0.33 per mile) x (2,500 miles per week) x (52 weeks) + ($1,500 sign-on bonus) = $44,400 per year

Johnathan subtracts what he would make in his first year working at PHL Trucking Company from his current annual earnings using the formula below:

($48,100 per year) - ($44,400 per year) = $3,700

He realizes that if he accepts the job at PHL Trucking Company, he would earn $3,700 less in his first year than he currently makes. Johnathan decides to continue working for Heavy Trucking LLC.

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