The New Jersey Department of Labor and Workforce Development (NJDOL) has reached a $2.7 million settlement with STG Logistics, Inc. and subsidiaries resolving allegations that the shipping and logistics companies misclassified hundreds of truck drivers as independent contractors in violation of the state’s labor laws.

This settlement resolves the first lawsuit filed under New Jersey’s 2021 law that permits the state to file suit in New Jersey Superior Court against employers who have misclassified workers as independent contractors.

NJDOL began investigating STG’s predecessor, XPO Logistics, in 2019, focusing on its facility in Newark. STG Logistics purchased XPO’s New Jersey intermodal business in 2022 and assumed liability for the its past employment practices. The state filed suit against STG in December 11, 2023.

Through its investigation, NJDOL found that STG treated employee truck drivers as independent contractors. This misclassification deprived workers of rights and benefits afforded to employees, including minimum wage, overtime, workers’ compensation, unemployment insurance, temporary disability benefits, earned sick leave, job-protected family leave, and equal pay protections.

Under the settlement agreement, truck drivers and the state will receive payment despite STG having filed for bankruptcy earlier this year. The settlement amount is considered “priority” under both the bankruptcy code and the settlement agreement, ensuring workers are compensated ahead of other creditors.

“This was our first-ever Superior Court misclassification case, and we saw it through to the end—surviving a company sale, a bankruptcy, and years of litigation,” said Acting Labor Commissioner Kevin D. Jarvis. “The message is clear: New Jersey will use every tool at our disposal to protect workers, and we’ll fight until the job is done.”

Under New Jersey’s test, workers are presumed to be employees unless a company can prove the individual is largely free from the company’s control, performs work outside the company’s usual business or outside its places of business, and has their own independent business. STG failed to meet any of these requirements, according to the state.

Topics Claims New Jersey Trucking