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Carrier loses fight against Biden independent contractor rule in New Mexico court

Will Trump administration turn the tables and torpedo Biden rule?

A carrier's request for summary judgment in a fight against the Biden independent contractor rule was rejeced. (Photo: Jim Allen\FreightWaves)

Though a case filed by Colt & Joe Trucking against the Department of Labor’s independent contractor (IC) rule dates back to April, the federal court decision against the carrier reads like a preliminary scorecard on a possible reworking of the rule under a Trump administration.

Colt & Joe, a New Mexico-based carrier, filed suit in April seeking summary judgement to have the Biden administration IC rule set aside. But in a decision handed down Thursday, the court declined to do that. (The decision being released on Thursday was ironic: It came a year to the day after the DOL released its IC rule, which at the time was seen by some trucking industry legal observers as less anti-IC than they had feared.)

Colt & Joe lost on all its requests. The U.S. District Court for the District of New Mexico ruled that the carrier did not have standing to challenge the law in federal court, and that even if it did, its arguments “either fail or have been improperly briefed and therefore waived.”


Where the future can be seen in the decision is the prospect that the incoming Trump administration, which saw its own IC rule torpedoed in favor of the Biden rule, may try to reimplement an IC rule along the lines of what it introduced just weeks before the end of the first Trump administration.

The Trump IC rule was withdrawn soon after Joe Biden took office. It also hadn’t been implemented until the final weeks of the Trump administration. 

But a court ruled that the withdrawal was improper, and the Trump rule was reinstated. That was followed by the standard rulemaking process, which eventually produced the rule challenged by Colt & Joe.

Contemplating the end of the Biden rule

The lesson that could be taken from what the Biden administration rule went through to push out the Trump rule and implement its own is that first, there is a required process for doing that; and second, it can be done if the rules are followed. That means the Colt & Joe lawsuit is against a federal regulation that might be on its last legs anyway.


Even if the Biden rule faces an uncertain future, Judge Kea Riggs laid out a defense of how it became law, which was being challenged by Colt & Joe.

Colt & Joe did not have standing, according to Riggs, citing an earlier precedent, because “merely alleging that a regulation has a chilling effect is not sufficient to give rise to standing.” Standing can be created if a party has to take significant steps to avoid litigation over its actions, the judge wrote, but Colt & Joe “has not properly alleged concrete efforts to avoid litigation, only that the 2024 Rule may have subjectively chilled their business practices.”

While Colt & Joe said it had avoided a new IC relationship because of the DOL rule, that isn’t enough to generate summary judgement at this stage of the litigation, Riggs said.

In addressing the carrier’s argument that the DOL action was “arbitrary and capricious” – which the court rejected – Riggs reviewed the difference between the two rules, which may be a factor going forward if there is a Trump administration attempt to substitute its earlier rule for the Biden rule.

Two above the rest in Trump rule

The key difference between the two was the elevation of two factors above four others in the Trump rule. That contrasts with the Biden administration rule, in which the tests are all to be given equal weight when the Wage and Hour Division of the DOL takes up a worker petition.

Those tests, according to the DOL, are “opportunity for profit or loss a worker might have; the financial stake and nature of any resources a worker has invested in the work; the degree of permanence of the work relationship; the degree of control an employer has over the person’s work; whether the work the person does is essential to the employer’s business; and a factor regarding the worker’s skill and initiative.”

Riggs – who was appointed by Trump – subtly criticizes the structure of the Trump’s IC rule and its emphasis on the two factors in determining whether a worker was truly independent or should be considered an employee: control over the work and the opportunity to work for profit. Those tests are seen as more likely to result in the Wage and Hour Division’s finding that a worker was independent.

Riggs writes: “As a preliminary matter, it is not clear that the [Fair Labor Standards Act] even permits a test that emphasizes two factors. The Supreme Court routinely emphasized that ‘no one factor is controlling’” in two earlier precedents on the question of IC status, she added, in cases known as Silk and Rutherford.


Colt & Joe had argued that the move away from elevating the two factors was one of the reasons the DOL was “arbitrary and capricious” in creating the Biden rule. But with Riggs not fully accepting that the elevation of those two is compatible with the FLSA, “if the FLSA does prohibit a test that emphasizes two factors, that would mean that Plaintiff’s assertion that the DOL operated from a ‘faulty legal premise’ fails, because the 2024 Rule would be correcting the potentially unlawful 2021 rule.”

Riggs rejected several other arguments from Colt & Joe, including that acting Secretary of Labor Julie Su – who was never confirmed by the Senate and has been a long-standing recess appointment – had no authority to implement the rule.

Oral arguments upcoming in Louisiana case

Another court case challenging the Biden administration rule with its roots in trucking interests is set for oral arguments Feb. 5. That case is being led by the Louisiana Motor Transport Association along with several companies as co-plaintiffs. Like the Colt & Joe case, the defendant is the DOL.

In that case, filed in the U.S. District for the Eastern District of Louisiana, a request for an injunction against the rule was denied. That put the case into the 5th U.S. Circuit Court of Appeals, where oral arguments will be made in a few weeks, a little more than two weeks after the end of the Biden administration that put the law on the books.

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.