I finally got it to work. There are lots of little moving pieces that I had to correct.
For anyone wanting to update labor details using Powershell and DMT here is my basic code:
#DMT Automation Example 1
$DMTPath = "<Location of your client folder>\DMT.exe"
$User = "<user>"
$Pass = "<password>"
$Source = "<Location of your source file>"
#Load Data
Start-Process -Wait -FilePath $DMTPath -ArgumentList "-User $User -Pass $Pass -Add -Update -Import `"TE Labor Detail No Header`" -Source $Source "