New Jersey reaches $2.8 million settlement with trucking company in worker misclassification lawsuit
TRENTON, N.J. — New Jersey has reached a settlement requiring a trucking and logistics company to pay at least $2.775 million to resolve allegations that it misclassified hundreds of truck drivers as independent contractors, state officials announced Wednesday.
Attorney General Jennifer Davenport and Acting Labor Commissioner Kevin D. Jarvis said the settlement with STG Logistics Inc., STG Drayage LLC and related subsidiaries resolves the first lawsuit filed under New Jersey’s 2021 law allowing the state to sue employers in Superior Court for worker misclassification.
Under the agreement, approximately $2.22 million will be distributed to hundreds of truck drivers in back wages, while $555,000 will go to the State of New Jersey for wage and hour penalties and contributions to the Unemployment Compensation and State Disability Benefits funds.
Officials said the settlement was reached despite STG filing for bankruptcy earlier this year. Because the settlement is considered a priority under federal bankruptcy law and the agreement, workers will be paid 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.”
“Corporate wrongdoers cannot pad their profits by cutting corners and exploiting the workers who keep their businesses running,” said Attorney General Jennifer Davenport. “This settlement will ensure that hundreds of workers will finally receive money they are rightfully owed and should have been paid right from the start of their tenure as employees. We are proud to stand with the Department of Labor in holding STG accountable for its unlawful conduct.”
The settlement also requires STG to comply with New Jersey labor laws and provide information to the Department of Labor to ensure ongoing compliance. If the company violates the agreement, it could face an additional $7.5 million in penalties payable to the state.
The Department of Labor began investigating STG’s predecessor, XPO Logistics, in 2019 at its Newark facility. STG acquired XPO’s New Jersey intermodal business in 2022 and assumed liability for the company’s prior employment practices. The state filed suit in Superior Court in December 2023.
According to the state, the investigation found the company improperly classified hundreds of truck drivers as independent contractors, depriving them of employee benefits and protections, including minimum wage, overtime pay, workers’ compensation, unemployment insurance, temporary disability benefits, earned sick leave, family leave protections and equal pay rights.
State investigators also alleged the company failed to pay required wages, made unlawful deductions from drivers’ pay for expenses such as fuel, tolls, insurance and truck maintenance, failed to maintain payroll records, did not provide earned sick leave, lacked sufficient workers’ compensation insurance and failed to make required contributions to state unemployment and disability funds.
Officials said the company exercised significant control over drivers by requiring its name on trucks, mandating exclusive truck leases, restricting outside work, requiring non-negotiable independent contractor agreements, installing GPS tracking devices and assigning routes and pay rates.
Under New Jersey’s “ABC” test, workers are presumed to be employees unless an employer can demonstrate they are free from the company’s control, perform work outside the company’s usual course of business or places of business, and operate an independent business. State officials alleged STG failed to meet those requirements.
