Employee or independent contractor?
The argument concerning how to determine worker classification has heated up in recent years, especially in the trucking industry.
In early 2025, a federal court gave a legal victory to the Biden administration’s independent contractor rule. However, a new administration could pave the way for another rulemaking to determine if a worker is an employee or an independent contractor.
A federal court recently threw out a trucking company’s lawsuit challenging the Department of Labor’s new independent contractor rule that was issued under the Biden administration, but a similar lawsuit was pending in an appellate court.
On Jan. 9, a New Mexico federal district court granted the Department of Labor’s motion for summary judgment in a lawsuit filed by Albuquerque, N.M.-based Colt & Joe Trucking. The trucking company claims the federal government’s new independent contractor rule is unlawful and needs to be rescinded.
Colt & Joe Trucking’s worker classification lawsuit is one of several challenges to the Department of Labor’s new standards that determine who is considered an independent contractor. Finalized in January 2024, the rule replaces standards established by the Trump administration in 2021.
The 2024 rule requires employers to consider six different factors when determining whether a worker is an independent contractor, including:
- Opportunity for profit or loss depending on managerial skill
- Nature and degree of control
- Investments by the worker and the employer
- Permanence of the work relationship
- Skill and initiative
Whether the work performed is integral to the employer’s business
No single factor is determinative, and no one factor or combination of factors holds more weight than others.
The 2021 worker classification rule included only five factors, with opportunity for profit/loss and nature/degree of control considered “core factors.”
If those core factors clearly favored an independent contractor, the determination was made. If the core factors were more ambiguous, then the remaining three factors were available for further guidance.
Proponents of the new rule have claimed it would solve widespread issues of misclassification. Opponents have argued the more ambiguous six-factor economic reality test would force employers to reclassify bona fide independent contractors as employees.
In its lawsuit, Colt & Joe Trucking claims the 2024 rule harmed it, as the rule caused the company to “spend more time and resources analyzing whether drivers with whom it contracts are properly classified as independent contractors or employees.” It claims it severed working relationships with four independent contractors in April 2024 and has been unable to replace those drivers due to the uncertainties of the new rule.
The trucking company argues that the 2024 worker classification rule is arbitrary and capricious for several reasons. The lawsuit also claims the rule is unlawful because Acting Secretary of Labor Julie Su lacked authority.
Judge Kea Riggs was unpersuaded and denied Colt & Joe Trucking’s motion for summary judgment. However, the Department of Labor did convince Judge Riggs that the trucking company has no standing to file the lawsuit.
In order to have standing, Colt & Joe Trucking must show the following:
- It has suffered an injury.
- There is a causal connection between the injury and the 2024 independent contractor rule.
- It is likely that the injury will be redressed by vacating the rule.
The Department of Labor has said that the trucking company’s claimed injuries are speculative.
In this case, Colt & Joe Trucking lost independent contractors and had difficulty replacing them because it assumed the new rule would render drivers employees. However, no enforcement measures have been taken that validate such an interpretation of the rules.
“Merely alleging that a regulation creates a chilling effect is not sufficient to give rise to standing,” Riggs states in the order.
Consequently, the case was dismissed on lack of standing. Colt & Joe Trucking can appeal that decision.
Meanwhile, there are at least four other lawsuits challenging the 2024 worker classification rule, three of which have suffered blows at the district court level.
In February 2024, another trucking company, Frisard’s Transportation, filed a lawsuit against the Department of Labor. Its motion to block the new independent contractor rule while litigation is ongoing was denied by a Louisiana federal court last March. As of press time, a hearing for oral arguments in the appeal to that decision was set for Feb. 5.
Another case was filed by freelance writers and editors in January 2024 in a Georgia federal court but was dismissed that October. An appeal is pending in the 11th Circuit. Freelance writers filed a separate case in Tennessee in February 2024. No significant ruling has been handed down in that case, but motions for summary judgment and to dismiss are pending.
Lastly, the Coalition for Workforce Innovation filed its lawsuit in March 2021 in a Texas federal district court. The businesses group challenged a similar rule issued in 2021, which the Texas court lifted in March 2022. However, the Fifth Circuit reversed that reversal while litigation played out. After the 2024 rule was finalized, the lawsuit was revived and sent back to the Texas district court, where it awaits a ruling on motions for summary judgment and to dismiss.
Now with President Donald Trump back in office, it is possible that his administration will attempt to return to its previous rule for determining a worker’s status. LL