NEWARK, NJ — Hundreds of truck drivers who worked for a Newark-based company will split a combined $2.2 million from a recently settled lawsuit, New Jersey state officials say.
On Wednesday, prosecutors announced that the state has reached a settlement with STG Logistics Inc. and STG Drayage LLC in connection with allegations that the companies misclassified hundreds of drivers as "independent contractors" instead of staff employees – cheating them out of wages, benefits and job protections.
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The attorney general's office and labor department released a copy of the settlement agreement, which can be viewed online here.
According to state prosecutors, the labor department began investigating STG's predecessor, XPO Logistics, in 2019, focusing on their facility located at 283 Wilson Avenue in Newark.
STG Logistics purchased XPO's New Jersey intermodal business in 2022 and assumed liability for the seller's past employment practices, prosecutors said.
In 2023, the state filed a lawsuit against STG in Superior Court. Prosecutors alleged that the companies reported truckers as independent contractors, despite having "significant control" over the terms of employment. This included assigning routes, requiring GPS trackers, forcing drivers to sign "non-negotiable" independent contractor agreements, and making drivers lease their trucks to the company for its exclusive use.
Under New Jersey's ABC 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, prosecutors said.
When an employee is misclassified, it can have a serious impact on their livelihoods, authorities said. The labor department investigation found that STG allegedly:
The alleged misclassifications deprived workers of other rights and benefits such as overtime, temporary disability benefits, job-protected family leave and equal pay protections, prosecutors said.
The companies also failed to make required contributions to the state's unemployment compensation fund and the state disability benefits fund, prosecutors said.
Under the settlement agreement, the affected truck drivers and the state will receive at least $2,775,000. Out of this pool, $2,220,000 will go directly to hundreds of truck drivers, and $555,000 will go to the state of New Jersey.
If STG violates the agreement, the labor department will receive an additional $7.5 million in penalties owed to the state.
The settlement comes despite STG having filed for bankruptcy earlier this year, which "resulted in many debts being canceled," prosecutors said.
The attorney general's office noted that the lawsuit was a landmark legal case: it was the first filed under New Jersey's 2021 law that permits the state to file suit in Superior Court against employers who have misclassified workers as independent contractors.
"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," Acting Labor Commissioner Kevin Jarvis said.
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