Every time I review a carrier, I ask for the driver roster and the 1099 list. If the 1099 list is long and the trucks on it were bought, leased or financed through the carrier or a company sitting next to it, I already know where the rest of the review is headed. The honest owner-operator with his own truck, his own customers and his own business decisions has always existed. He’s also always been the minority of the people carrying a 1099 in this industry.
In July I wrote about carriers that lease on the revenue and pretend they didn’t lease on the risk. This is the other side of that coin: the carriers that build the lease itself as the business model, and what happens to everyone involved when it breaks.
Congress created the Truck Leasing Task Force in the Infrastructure Investment and Jobs Act, and FMCSA seated it in 2023. Its eight members spent 18 months on testimony, court records and contracts. On Jan. 16, 2025, it sent a 51-page final report to Congress and the departments of Transportation and Labor. The finding was unanimous. Lease-purchase programs where a motor carrier controls the driver’s work, pay and debt at the same time should be banned outright. The task force called them “irredeemable tools of fraud and driver oppression.” It said these agreements fail more than 90% of the time, and its public court data subcommittee estimated that conservatively more than 200,000 drivers have been hurt by predatory programs.
Some members of that task force walked in believing lease-purchase was a real path to ownership. The American Trucking Associations said the research lacked the motor carrier perspective. There are carriers running clean programs with real equity, fair terms and drivers who walk away owning their trucks. The task force’s scope excluded third-party financing, where the lender has no role in dispatch. None of that changes the math on the programs it did study.
The carrier, or an affiliate with a different name and the same owners, holds title to the truck. The driver signs a lease and an independent contractor operating agreement on the same day. The carrier dispatches him, sets his rate, decides which loads he gets and deducts the truck payment, insurance, fuel, maintenance escrow, tolls and anything else it wants from his settlement. If the settlement goes negative, he owes the carrier. If he quits or gets terminated, he loses everything he’s paid in and the truck goes to the next driver. Some programs advertise it right on the flyer: no credit check, nothing down, walk away anytime, keep 88% of every load. The flyer doesn’t say who controls the loads that make up that 88%.
In the Blakley v. Celadon litigation in federal court in Indiana, class-certification filings showed that from 2013 to 2017, Celadon hired 6,786 people into its lease-purchase program as independent contractors. Plaintiffs said 90% to 95% failed to complete it, and Celadon admitted at least half of those so-called contractors left the program owing money. Celadon later went bankrupt. In 2019, Knight-Swift agreed to a $100 million settlement with roughly 20,000 drivers who said Swift’s lease program made them employees in everything but name. Their lawyers argued the drivers couldn’t have been independent when Swift could terminate the lease for any reason and still demand the payments.
In New Jersey, a judge ruled in 2022 that NFI’s drivers were employees under state law, and the court preliminarily approved a $5.75 million settlement in August 2025. NFI had made those drivers pay for fuel, truck leases, insurance, equipment, permits and plates. In December 2025, Southway Carriers agreed to settle claims from drivers who operated under its lease and lease-to-purchase agreements from 2013 through 2025. The suit alleged misclassification and unauthorized deductions from settlements. In California, three carriers paid $9.25 million to settle claims from 796 misclassified drivers. New Jersey’s attorney general sued STG Logistics in December 2023 to stop what the state called systematic misclassification of employee truck drivers. These are a handful out of hundreds.
Put that same driver in a crash.
He’s on a 1099. He doesn’t have workers’ compensation because the carrier told him contractors don’t get it. If he has anything, it’s an occupational accident policy the carrier sold him through a deduction on his settlement. Those policies are not workers’ comp. Benefits are capped, coverage is narrow, and in some cases the occ-acc carrier will deny the claim, arguing the injured man was really somebody’s employee, which is the exact argument his own lawyer is about to make.
He files for workers’ comp anyway. Comp courts don’t care what the contract says. They look at control: who owned the truck, who decided the loads, how he was paid, whether he could work for anyone else, whether he could actually make or lose money on his own decisions. In South Carolina, a truck driver who signed an independent contractor agreement with Mercer Transportation recovered $1.25 million in a workers’ compensation settlement after an unsecured load fell on him, because the state looks at the relationship, not the label. In Pennsylvania, the Workers’ Compensation Appeal Board reversed a judge and found a driver who signed an independent contractor agreement was an employee, mainly because the employer owned the truck and paid him by the mile. That employer had told him at signing there would be no comp coverage.
That’s where it turns into bad news for everyone. Once the driver is ruled an employee, the carrier is an employer that was legally required to carry workers’ comp on him and didn’t. If the carrier has a comp policy, it was written and priced on a payroll that left out every 1099 driver, and the insurer’s premium audit will find them. If the carrier has no comp policy, the claim goes to the state. In Virginia, where I live, most employers must carry workers’ comp, and an injured worker whose employer doesn’t can file with the Workers’ Compensation Commission’s Uninsured Employer’s Fund. Pennsylvania has the Uninsured Employers Guaranty Fund. Montana’s Workers’ Compensation Court has handled truck driver claims against its Uninsured Employers’ Fund for decades. These funds exist to pay injured workers. Then the state comes after the employer for what it paid, plus penalties.
It rarely stops at one driver. A comp ruling that one 1099 driver was an employee is a road map for the state labor department, the unemployment insurance division and the revenue department to audit every other 1099 on that roster. Back premiums, unpaid unemployment taxes, withholding, penalties and interest stack up across years. A plaintiff’s attorney in the third-party crash case, the one where the motoring public got hurt, is reading the same file. A carrier that called its drivers independent to avoid the cost of employing them now gets to explain to a jury why it controlled every load they hauled. Meanwhile, the driver who got hurt is waiting on a fund to pay his medical bills, and the carrier that put him in that truck may already be gone.
That’s why I treat a heavy, carrier-financed 1099 roster as a fraud indicator, not just a labor law problem. The business model that pushes cost and risk onto the driver also strips out what makes a carrier hard to walk away from: employees, payroll, comp coverage, and equipment on its own books. A company with no employees, no comp exposure on paper and trucks titled to an affiliate can shut down an authority, open a new one and move the same drivers and the same trucks across the gap with very little friction. That’s the chameleon carrier pattern, and the lease structure greases it.
FMCSA noticed the market around it. In February, Administrator Derek Barrs announced an enforcement push aimed at chameleon carriers. On March 13, the agency issued a bulletin warning truckers not to buy, sell or lease a USDOT number or operating authority outside a legitimate corporate transaction, and said it would move to inactivate numbers and revoke registrations when it found that happening. When you can lease a truck, a driver and an authority, you can lease an entire trucking company’s identity without ever building one.
Congress is moving. The House Transportation and Infrastructure Committee approved the BUILD America 250 Act 62-2 on May 22. The bill includes a provision directing DOT to write a rule prohibiting predatory lease-purchase programs by motor carriers, along with separate provisions aimed at chameleon carriers. OOIDA President Todd Spencer welcomed it. Truckload Carriers Association President Jim Mullen questioned whether FMCSA is the right agency to police it. At the same time, the Labor Department proposed in February to rescind the 2024 independent contractor rule and return to a framework built around two core factors: control and opportunity for profit or loss. The 2024 rule stayed in effect while that proposal was pending.
Federal labor rules swing every time the White House changes hands. State law doesn’t swing with them. New Jersey presumes a worker is an employee unless the company proves otherwise. California’s ABC test applies to trucking. Workers’ comp is decided state by state, by commissions that see injured drivers with no coverage every week and, in my experience, have very little patience for the carrier that left them that way. A carrier that builds its model on whichever federal rule is in fashion this year is betting the company on an appeal board in a state it may not even be based in.
I’m not arguing against owner-operators. I’ve been one, I’ve leased them on, and I’ve watched good ones carry fleets on their backs. The real owner-operator has his own truck, financed by somebody who doesn’t dispatch him, and a contract that gives him real choices about what he hauls and for whom. He carries his own coverage, and he can make or lose money based on how he runs his business. That relationship is legal, it’s valuable, and it’s worth protecting. It’s also easy to see in a file.
So is the other one. If you’re a broker vetting capacity, a shipper building a carrier list, an insurer underwriting a fleet or a safety director auditing your own operation, ask the questions I ask. How many drivers are on a 1099, and who holds title to their trucks? Is the lessor a separate company with the same owners, the same address or the same phone number as the carrier? What comes out of a settlement, and can it go negative? Does the carrier carry workers’ comp, and does its comp payroll match its driver count? What happens to a driver’s equity when he leaves? If the answers are a lot, the affiliate, everything, yes, no and nothing, you aren’t looking at a fleet of independent businesses. You’re looking at employees with somebody else’s risk tied to their necks and a carrier that has arranged its books so it can disappear.
The task force told Congress the system harms drivers and gives individual carriers an economic edge at the expense of the industry and highway safety. It’s harder to argue with someone who’s sat across from a driver who just found out his comp coverage was deducted from a settlement statement. The industry’s question is how many more hearings it takes before the 1099 stops being treated as a business model and starts being treated as evidence.
Agree, this business practice is fraud all the way through, always has been. This fraudulent lease practice makes competing with the fraudsters, who have a markedly lower cost structure, all but impossible for a legit carrier who plays by the rules. Where is the IRS in this? Sounds like RICO to me if anyone in our accountable adverse government would get off their ass.
I spent 35 years in the business. What truck lines believe or use to believe depending on who you talk to, is that drivers don't have the knowledge or finances to fight against this form of fraud. Intimidation runs rampant in this business.
What business owners failed to take into account, is that drivers have as much right to representation in cases of fraud just as a millionaire would.
One company I worked for pushed their independent drivers too far. They got a lawyer and sued over the illegitimacy of how the business was run.
The IRS became involved and the ending wasn't pretty. One afternoon, the owner walked to his car, got behind the wheel and blew his brains out.
It was later learned that his trucking company went into receivership by order of the State and apparently it was more than he could handle.