The first lawsuit under a 2021 New Jersey independent misclassification law has been filed against trucking companies, state officials announced Dec. 11, 2023. The legislation allows actions to be brought directly in New Jersey Superior Court.

The suit claims STG Logistics Inc. and STG Drayage LLC misclassified truck drivers as independent contractors, according to the New Jersey Department of Labor and Workforce Development. The department filed the suit along with the New Jersey attorney general.

“Companies illegally profiting through corrosive business models at the expense of hard-working employees have been put on notice,” New Jersey Labor Commissioner Robert Asaro-Angelo said in a press release. “Misclassifying employees will not be profitable nor overlooked.”

The suit seeks to stop the companies from misclassifying drivers as independent contractors as well as get back wages, penalties and fines, the department said. It also seeks damages from what it alleges are improper deductions. More than 300 truck drivers were affected, according to the department.

SIA has reached out to STG Logistics for comment.

According to the Department of Labor and Workforce Development, misclassification in this case caused drivers to, at times, receive less than the minimum wage. In addition, deductions were sometimes greater than a driver’s entire gross pay, resulting in negative pay during some periods, it said.

The New Jersey Department of Labor began an investigation leading to this lawsuit in 2019. At the time, the investigation began at a Newark, New Jersey facility owned by XPO Inc. However, STG Logistics acquired XPO Drayage at one point during the investigation and assumed liability for the seller’s past employment practices, according to the department.

An investigation by the department found the companies exercised significant control over the drivers, according to the department, including:

  • Requiring the company’s name appear on trucks.
  • Requiring drivers to lease their trucks to the company for exclusive possession, control and use.
  • Prohibiting drivers from using their trucks for other work without the company’s written consent.
  • Requiring drivers to sign non-negotiable independent contractor agreements.
  • Requiring installation of a GPS tracking device in the driver’s trucks, which collected location, vehicle motion status, miles driven and engine hours.
  • Assigning all routes, tightly monitoring the status of deliveries and setting rates of pay.
  • Mandating drug and alcohol testing, completion of a defensive driving course, acquisition of certain types of insurance, disclosure of monthly maintenance records and immediate accident reporting.

XPO previously paid New Jersey $893,671.28 to resolve a prior audit finding that the company did not make required contributions to the Unemployment Compensation and Disability Benefits Funds from 2015 through 2018, according to the department.

Workers are presumed to be employees under most of New Jersey’s labor laws, according to the department, unless companies can prove the following under the ABC test:

  1. The individual is largely free from control or direction over the performance of their work;
  2. 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; and
  3. The individual has their own independent trade, job, profession or business.