Trucking company has agreed to a settlement of $2.8M in NJ for driver misclassification as independent contractors
The New Jersey (NJ) Attorney General’s Office and the NJ Department of Labor and Workforce Development (NJ DOL) announced last week that STG Logistics (an Ohio company) has agreed to pay at least $2.8M to settle the driver misclassification case (Superior Court of New Jersey; Law Division – Essex County; Docket No. ESX-L-2450-24; Civil Action; Settlement Agreement; click here for details).
What happened?
· In 2019, the NJDOL began investigating intermodal operations in Newark.
· Through its investigation, NJDOL found that STG misclassified truck drivers as independent contractors even though the company controlled many aspects of their work.
According to NJDOL, the company effectively treated truck drivers as employees, but they were denied protections including minimum wage, overtime, paid sick leave, workers’ compensation coverage and required employment benefits.
The company required the drivers to display the company’s name on their trucks, lease their equipment exclusively to the company, accept assigned routes and rates, install GPS tracking devices, and sign non-negotiable independent contractor agreements.
· New Jersey, as most other states including Illinois, uses the following “ABC” test. This means they presume all workers are employees unless a company can demonstrate:
A. The workers are free from the company’s control;
B. The workers can perform work outside the company’s usual course of business; and
C. The workers operate an independently established business.
· The NJDOL found that STG failed to satisfy any of those requirements.
· The NJ Attorney General’s Office and NJDOL filed suit against the company in 2023.
What does the settlement mean:
· $2.2 million will be distributed to hundreds of truck drivers as back wages.
· $555,000 will go to the state through wage and hour penalties as well as contributions to unemployment and disability benefit funds.
· $7.5 million penalty will remain against STG if they violate the settlement or fail to comply with state labor laws.
New Jersey Attorney General Jennifer Davenport remarked, “Corporate wrongdoers cannot pad their profits by cutting corners and exploiting the workers who keep their businesses running.”
She went on, “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.”
What should you do:
· Review your operations to make sure you comply with the ABC test.
· Call our office if you would like to discuss further.
· See also:
Slight Change To Independent Contractor Interpretation, B&D Blog, May, 2025
That Independent Contractor May Be An Employee Now!, B&D Blog, January, 2024
If you would like to discuss or receive more information on this content, please contact us. The attorneys at Boodell & Domanskis are available to answer your questions about any general issues concerning your business.
