What “1099” really means in trucking
When a carrier pays you on a 1099, it’s classifying you as an independent contractor, not an employee. That means you run your own business, shoulder your own costs, and pay both sides of payroll taxes (the 15.3% self-employment tax for Social Security and Medicare) on your net profit. You also don’t receive overtime, unemployment insurance, or employer-paid workers’ comp unless you buy your own coverage.
Where regulators stand in 2025
The U.S. Department of Labor’s 2024 rule reaffirmed a multi-factor “economic reality” test under the Fair Labor Standards Act (FLSA) that generally makes it harder to treat workers as contractors. It took effect March 11, 2024. In a significant 2025 development, DOL issued Field Assistance Bulletin guidance on May 1 indicating it would not apply the 2024 rule in enforcement while it reviews the standard; investigators will instead rely on earlier guidance. Private lawsuits and state rules still apply, so classification risk remains.
When a 1099 can be legitimate
Contracting is more defensible when you operate like a true business: hold your own authority or work via brokers, choose loads and rates, can decline dispatches without retaliation, carry your own insurance, and bear a real risk of profit or loss. The DOL’s factors look at control over the work, opportunity for profit or loss, skill, permanence, and how integral the work is to the carrier’s business. Notably, DOL has recognized the CDL as a specialized skill—helpful, but not determinative—if you use it with business-like initiative.
Red flags that a 1099 offer may be misclassification
- Forced or “ strongly encouraged” dispatch; little freedom to refuse loads.
- Set schedules, routes, or company-directed procedures beyond legal compliance or safety rules.
- Company control of equipment selection, maintenance schedule, or branding, with chargebacks deducted from settlements.
- Pay by the mile with no real ability to negotiate rates; prohibition on hauling for others.
- “Contractor” required to attend employee-style meetings or training and follow evaluation systems unrelated to contract outcomes.
These cues point to behavioral, financial, and relationship control—key IRS categories used to determine whether someone is really an employee.
California’s AB5 is a game-changer
In California, AB5’s “ABC test” presumes a worker is an employee unless the hiring entity proves all three prongs, including that the work is outside its usual course of business. That “B” prong is especially tough for lease-on driver arrangements. Courts have upheld applying AB5 to trucking, and the California Trucking Association ended its legal fight in 2024, though other litigation continues. Carriers and drivers operating in California should reassess models accordingly.
Lease-purchase: proceed with extreme caution
In January 2025, FMCSA’s Truck Leasing Task Force urged Congress to ban carrier-run lease-purchase programs, calling them “irredeemable tools of fraud.” The task force said very few drivers ever end up owning the truck and warned of negative paychecks after deductions. Even if not banned yet, the signal is clear: scrutinize any lease-purchase terms and consider independent financing if ownership is your goal.
What fleets and drivers should do now
- Audit control: Fleets should map how much control they exert over “contractors” (dispatch, schedules, equipment, branding). If it looks like employment, consider converting to W‑2 to reduce exposure.
- Paper matches practice: Contracts that say “independent contractor” won’t save you if day-to-day operations say “employee.”
- Mind the jurisdictions: State rules like AB5 can be stricter than federal guidance; the most worker-protective standard typically governs outcomes.
- Drivers: If you truly want 1099 freedom, build a business plan—authority or broker relationships, insurance, cash reserves for maintenance, tax estimates paid quarterly, and a rate strategy.
- When in doubt, ask: Either party can file IRS Form SS-8 to request a worker-status determination, though it can take months.
Bottom line
A 1099 trucking job isn’t “bad” by definition—but it is high risk if the carrier dictates how, when, and where you work, or if you’re effectively embedded in the carrier’s core business. With DOL’s enforcement posture in flux and state laws like AB5 tightening the screws, the safe play is to structure genuine business-to-business relationships—or use W‑2 employment—rather than paper over control with a 1099.
Sources Consulted: U.S. Department of Labor; Internal Revenue Service; Federal Motor Carrier Safety Administration and industry reporting (FleetOwner, Commercial Carrier Journal); California Attorney General; Transport Topics.
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This article was prepared exclusively for truckstopinsider.com. For professional tax advice, consult a qualified professional.
