The U.S. Department of Labor (DOL) has issued a proposed rule that would reshape how independent contractor (IC) status is evaluated under the Fair Labor Standards Act (FLSA), with significant implications for the trucking industry and its long-standing reliance on owner-operators. With the comment period now closed, the rule is moving toward finalization and provides important insight into the DOL's enforcement priorities.
At its core, the proposal returns to a streamlined version of the familiar "economic realities" test, focused on a central question: whether a driver is economically dependent on a carrier or operating an independent business. The DOL designates two "core" factors – control over the work and opportunity for profit or loss – as most important and emphasizes that actual working conditions, not contractual labels, will determine classification.
For the transportation industry, the key takeaway is straightforward: even if the legal test is familiar, the risk environment is intensifying.
The Framework: Focus on Control and Profit or Loss
The proposed rule applies a five-factor, non-exhaustive analysis: control, opportunity for profit or loss, skill, permanence, and integration. But the DOL makes clear that control and profit or loss will drive most outcomes. Where those factors point in the same direction, classification is likely to follow.
Equally important, the rule reinforces a point that has become central in enforcement and litigation: the reality of the working relationship matters more than how it is documented. For carriers that rely on independent contractor agreements, this means that contractual protections will not overcome operational practices that suggest economic dependence.
Key Points for the Transportation Industry
The proposed rule brings into focus several issues that are already central to trucking models and will likely define exposure going forward.
Control: Independent contractor status is strongest where drivers retain meaningful autonomy, including the ability to accept or reject loads, set schedules and routes, and work for multiple carriers.
The DOL confirms that compliance with Department of Transportation (DOT) and Federal Motor Carrier Safety Administration (FMCSA) safety requirements does not, by itself, constitute employer control. However, carrier-imposed requirements beyond legal mandates – including dispatch structures, exclusivity provisions, or operational restrictions – may weigh toward employee status. In practice, the line between coordination and control remains a key risk area.
Opportunity for Profit or Loss: The second core factor examines whether drivers have a real ability to influence earnings through business decisions. Indicators of independent contractor status include managing expenses, selecting profitable loads, and using business judgment to increase returns.
Where compensation is effectively fixed, or drivers can earn more only by working additional hours rather than exercising business discretion, the relationship begins to resemble employment.
Lease-Purchase Arrangements
These issues are most acute in lease-purchase and equipment-based models, which remain a primary source of exposure.
While these arrangements often involve significant driver investment (truck payments, fuel, maintenance, and insurance), investment alone is not determinative. The critical question is whether that investment is paired with meaningful control and genuine entrepreneurial opportunity.
Where drivers:
- bear substantial financial obligations, but
- lack control over loads, rates, or business decisions,
both core factors may point toward economic dependence.
This risk is particularly pronounced in carrier-affiliated lease programs, where the carrier controls both the driver's access to work and the structure of the financial arrangement. Regulators and plaintiffs' counsel are increasingly focused on whether these models reflect true business ownership or merely transfer financial risk to drivers without corresponding entrepreneurial independence. These arrangements are also drawing broader scrutiny from policymakers, further elevating their risk profile.
Practical Impact and What Carriers Should Do Now
Even if the final rule is not heavily relied upon by courts, its practical impact should not be underestimated. The proposal is likely to increase scrutiny of independent contractor models, provide additional framing for misclassification litigation, and reinforce enforcement efforts focused on day-to-day working relationships.
Importantly, the proposal does not displace state law standards. Many states apply more demanding worker-classification tests than the FLSA, and those standards often drive the most significant misclassification exposure for motor carriers.
Misclassification findings can expose carriers to wage and overtime claims, payroll tax liability, employee benefits claims, workers' compensation issues, unemployment insurance assessments, and class or collective action litigation.
Against this backdrop, carriers should not wait for finalization before evaluating whether their owner-operator models reflect genuine independence in practice. Carriers should focus on three core questions:
- Do drivers have meaningful control over how they perform their work?
- Do they have a real opportunity for profit or loss based on business decisions?
- Do operations reflect independence in reality, not just in contract language?
Particular attention should be paid to facts specific to the relationship, including but not limited to:
- dispatch and scheduling practices;
- restrictions on outside work or exclusivity;
- compensation and rate-setting structures; and
- lease and equipment arrangements, especially where financial risk is not matched by operational autonomy.
Bottom Line
The proposed rule does not fundamentally change the legal test, but it sharpens the focus on where trucking models may be most vulnerable, particularly in control-driven operations and lease-purchase structures.
Carriers that rely on owner-operator models should take this opportunity to evaluate whether their operational practices reflect genuine entrepreneurial independence and align with both federal and applicable state-law standards.
Baker Donelson attorneys are actively monitoring developments in this area. For questions or more information about this issue, please contact a member of the Firm's Labor & Employment Group.