Wealthy Companies Ripped Off NJ Truck Drivers In Newark: Lawsuit

NEWARK, NJ — More than 300 truck drivers were cheated by their wealthy employers in New Jersey and are owed millions of dollars in back pay, a lawsuit claims.

On Monday, state officials announced that a landmark lawsuit has been filed in Essex County Superior Court against the truckers’ current employers, STG Logistics Inc. and STG Drayage LLC. Read the full complaint online here.

According to the Attorney General of New Jersey, the lawsuit alleges that the companies have been misclassifying regular employees as independent contractors at a facility in Newark – an illegal bookkeeping practice that carries some stiff penalties.

Prosecutors are also alleging that truck drivers saw a wide range of “illegal deductions” taken out of their wages – including fees for fuel, tolls, parking, liability insurance and vehicle repairs – which sometimes ate up their entire paychecks.

The companies are also accused of failing to make sick time available under the Earned Sick Leave Law, failing to provide workers’ compensation insurance under the Workers’ Compensation Law, and not making the required unemployment and disability contributions to the state.

The companies required drivers to purchase trucks in their own name, but also forced the drivers to lease them back the vehicles for exclusive use and sign non-negotiable “independent contractor agreements,” prosecutors said.

The state is suing to recover “millions of dollars” in back wages, penalties and fines, and to stop the misclassification of the truckers. Prosecutors are also seeking damages for the companies’ alleged improper deductions.

Prosecutors offered the following summary of the allegations in the lawsuit:

“The state’s complaint … seeks to halt the companies’ alleged practice of misclassifying drivers as independent contractors, and to recover up to millions of dollars in back wages, penalties and fines, and back wages for more than 300 truck drivers. It also seeks damages for the companies’ alleged improper deductions from drivers’ pay. These practices not only resulted in the company at times paying truck drivers less than New Jersey’s effective minimum wage, but also, the deductions were sometimes greater than a driver’s entire gross pay, resulting in a negative net pay during some pay periods.”

The lawsuit announced Monday is the result of a long-running New Jersey Department of Labor and Workforce Development (NJDOL) investigation that began in 2019. At that time, the primary facility of concern – which is located at 283 Wilson Avenue in Newark – was operated by XPO Inc. and its subsidiary, XPO Logistics Drayage LLC.

In August 2020, XPO paid $893,671 to the state to settle a prior audit finding, which alleged that the company failed to make required contributions to the Unemployment Compensation and Disability Benefits Funds from 2015 through 2018.

The problem wasn’t a lack of income, prosecutors added: XPO reported a total revenue of $12.8 billion in 2021, up from $10.2 billion the previous year.

During the course of the state’s investigation, XPO Logistics Drayage was purchased for more than $700 million by STG Logistics, which has been owned by the private equity investment firm Wind Point Partners since 2016.

As part of the purchase, STG assumed liability for the seller’s past employment practices, including the state’s ongoing investigation – which was specifically mentioned in the deal, prosecutors said.

The facility at 238 Wilson Avenue is now operated by STG Drayage LLC. Its drivers deliver containers and goods over short to moderate distances, a practice known as “drayage trucking” – which is vital to the booming port industry in the area.

• See Related: Major Construction Begins At Port Newark, Elizabeth Terminal

However, despite the change in ownership, shady business practices have continued at the Newark facility, prosecutors alleged Monday.

In addition, STG has also misclassified truck drivers working at other New Jersey facilities, authorities said.

“These are national, profitable corporations with deep pockets who are padding their profits with illegal labor schemes, and they seem to have no plans to stop this kind of behavior,” Attorney General Matthew Platkin said.

INDEPENDENT CONTRACTOR OR EMPLOYEE: HERE’S THE DIFFERENCE

This week’s landmark lawsuit is the first that has been filed under a 2021 law that permits the state to file suit in New Jersey Superior Court against employers who have allegedly misclassified regular employees as independent contractors.

Workers are presumed to be regular employees under most of New Jersey’s labor laws, unless a company can satisfy what is commonly referred to as the “ABC test.” It requires companies to prove three things:

• A – The person is largely free from control or direction over the performance of their work
• B – The type of work performed is outside the company’s usual course of business, or the work is performed outside of the company’s place (or places) of business
• C – The person has their own independent trade, job, profession or business

Think it’s not a big deal to be labeled as an independent contractor? Think again, state officials say:

“Misclassification—illegally classifying and treating employees as independent contractors—deprives workers of rights and benefits afforded to employees, including minimum wage, overtime, workers’ compensation, unemployment, temporary disability, earned sick leave, job-protected family leave, and equal pay, and leaves workers unprotected against discrimination.”

Prosecutors pointed out that many workers in New Jersey meet state law standards for independent contractors. For example, a plumber who operates their own business and works in people’s homes would be an independent contractor – provided that they negotiate the terms of their services and payment with their many different clients, and have “complete discretion over the details of how they perform their work under most circumstances.”

When employees are misclassified as independent contractors, it doesn’t only harm workers. It also gives them an unfair advantage over the vast majority of companies that are playing by the rules, prosecutors said.

It’s a problem that was addressed by state legislation in 2020 and 2021, which gave New Jersey more power to stop the misclassification of employees – including bringing action directly in Superior Court and issuing stop-work orders.

• See Related: 9 Essex County Companies Got 'Stop-Work' Orders From NJ (What It Means)

“Companies illegally profiting through corrosive business models at the expense of hard-working employees have been put on notice,” NJDOL Commissioner Robert Asaro-Angelo said.

“Misclassifying employees will not be profitable, nor overlooked,” Asaro-Angelo added.

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