Why more drivers are moving from 1099 to company jobs

Across the industry, drivers and carriers are reassessing 1099 contractor arrangements in light of recent federal attention on misclassification. The U.S. Department of Labor’s final rule, effective March 11, 2024, restored a multi-factor “economic reality” test under the Fair Labor Standards Act, emphasizing the degree of control, opportunity for profit or loss, and whether the work is integral to the business. That framework makes it harder to justify treating many company-dispatched drivers as independent contractors and has nudged carriers toward W‑2 payroll relationships. Industry coverage at the time underscored the shift’s intent: reduce misclassification and extend wage-and-hour protections to more workers.

What truckers are asking right now

In a January 16, 2026 discussion on TheTruckersReport, drivers weighed the practical steps of moving from 1099 to W‑2, including how to handle back taxes when income was previously reported on a 1099. One recurring recommendation: if you owe the IRS from prior self-employment, consider requesting an installment agreement and begin making consistent payments immediately while your plan is reviewed. Several posters also suggested consulting an enrolled agent to determine a “reasonable” payment amount and to avoid missing any payments during the review period.

Taxes when you switch: what changes, what doesn’t

Withholding kicks in. As a W‑2 company driver, your carrier withholds income tax plus the employee portion of Social Security and Medicare. That reduces the need for quarterly estimated payments going forward—but it doesn’t erase prior liabilities from your 1099 period.
Back taxes can be spread out. If you can’t pay your 1099-era balance in full, the IRS lets eligible taxpayers request a monthly installment plan using Form 9465. Once approved, you’ll make on-time payments while penalties and interest continue to accrue until the balance is cleared. Setup user fees apply, with lower fees available for direct debit and certain low‑income taxpayers.
Document everything. Keep prior-year 1099s, expense records, and proof of estimated tax payments. If you had no estimates on file, be prepared for accrued penalties; a payment plan can limit collection actions if you honor its terms.

Classification and compliance: what fleets should revisit

Re-check worker status. The IRS looks at behavioral control, financial control, and the overall relationship to distinguish employees from contractors. When in doubt, businesses or workers can seek a determination using Form SS‑8, and carriers with legacy contractor models may review options like the IRS Voluntary Classification Settlement Program (VCSP) to reclassify prospectively.
Align policies with W‑2 status. Ensure onboarding includes a W‑4, I‑9, and state forms; set up payroll tax deposits; and update handbooks to reflect benefits, safety policies, training requirements, and disciplinary procedures consistent with an employment relationship.
Mind wage-and-hour rules. Under the DOL’s 2024 rule, the totality-of-circumstances test guides whether someone is an employee. For W‑2 drivers, make sure pay practices (including overtime where applicable) and recordkeeping match FLSA requirements.

Owner-operator and driver checklist for a smooth transition

Run a pay apples-to-apples. Compare your former 1099 net (after self-employment tax, health insurance, and equipment costs) to the W‑2 net including benefits, PTO, and any 401(k) match.
Square up with the IRS. If you owe for prior years, apply for a Form 9465 agreement online or by mail and start making monthly payments you can sustain. Missing payments can jeopardize the plan.
Adjust cash flow. Expect W‑2 withholding to reduce take‑home compared with untaxed 1099 checks, but factor in the elimination of quarterly estimates and the employer’s share of FICA the fleet now pays.
Verify deductions and per diem policies. Company per diem programs can improve after‑tax pay for eligible OTR miles; ensure they’re compliant and reflected correctly in payroll records.
Clarify equipment and insurance. In a company-driver model, the carrier typically provides the truck and primary coverages; confirm bobtail, occupational accident (if applicable), and any cost-sharing is retired or transitioned appropriately.

Bottom line

Shifting from 1099 to W‑2 can stabilize paychecks, reduce tax-time surprises, and align fleets with today’s enforcement environment. For drivers carrying prior tax balances, a realistic IRS installment agreement—paired with consistent on-time payments—can keep you moving while you make the transition. For fleets, now is the moment to align classifications, payroll, and policies to the 2024 DOL rule and long‑standing IRS tests. Done right, both sides gain clarity and reduce risk.

Sources Consulted: TheTruckersReport.com forum discussion; IRS.gov (Form 9465 instructions; worker classification guidance); U.S. Department of Labor (FLSA independent contractor final rule); AP News and Axios reporting on the 2024 classification rule.

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This article was prepared exclusively for truckstopinsider.com. For professional tax advice, consult a qualified professional.