STG Logistics has agreed to pay at least $2.8 million to resolve allegations it misclassified hundreds of truck drivers as independent contractors, settling what New Jersey officials say was the state’s first lawsuit brought under a 2021 law allowing the attorney general to sue employers over worker misclassification.
The settlement, announced jointly by the New Jersey Attorney General’s Office and the Department of Labor and Workforce Development, requires STG Logistics, STG Drayage and affiliated subsidiaries to pay at least $2.775 million, despite the company filing for bankruptcy earlier this year. STG Logistics since restructured and emerged from bankruptcy protection.
Of the amount, $2.22 million will be distributed to hundreds of truck drivers as back wages, while $555,000 will go to the state through wage and hour penalties and contributions to unemployment and disability benefit funds. The agreement also includes an additional $7.5 million penalty if STG violates the settlement.
State officials said the settlement amount has priority status in the bankruptcy proceedings, allowing workers to be paid ahead of other creditors.
The case stems from a 2019 investigation into XPO Logistics’ intermodal operation in Newark, N.J. STG acquired that business in 2022 and assumed liability for its past employment practices. New Jersey filed suit in December 2023.
Investigators alleged the company improperly classified drivers as independent contractors while exercising significant control over their work. According to the state, drivers were required 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.
The state also alleged the company failed to pay minimum wage and overtime, improperly deducted expenses including fuel, tolls, insurance and truck maintenance from drivers’ pay, failed to maintain required payroll records, did not provide earned sick leave, carried insufficient workers’ compensation coverage, and failed to make required unemployment and disability insurance contributions.
Under New Jersey’s “ABC” test, workers are presumed to be employees unless a company can demonstrate they are free from its control, perform work outside the company’s usual course of business, and operate an independently established business. State officials said STG failed to satisfy any of those requirements.
As part of the settlement, STG must comply with New Jersey labor laws going forward and provide information to the Department of Labor to verify ongoing compliance.
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