After a relatively short time litigating a misclassification lawsuit, STG Logistics has reached a settlement with owner-operators, resulting in the company ending its independent contractor owner-operator model in California.
A federal court in California recently signed off on a settlement ending a lawsuit accusing STG Logistics of misclassifying owner-operators. In addition to the $4.2 million payout, the trucking company has agreed to end its independent contractor model in the Golden State, according to the law firm representing former owner-operators who drove for the company.
The settlement ends yet another misclassification claim against STG Logistics. The company has settled other similar claims in addition to a pending lawsuit filed by the state of New Jersey.
Misclassification of California owner-operators
Filed in a federal court in February 2023, the class-action lawsuit was typical of misclassification claims against numerous large carriers in recent years.
Owner-operators accused STG Logistics of having a level of control over their operations that was “substantially similar” to that of the company’s employed drivers.
According to the complaint, STG Logistics had control over owner-operators’ operations, including the timing of their work, the work they performed and the steps required to complete their work. Such control included:
- Schedules that were decided by dispatch, with options rarely provided
- A point system for policy violations (with points given for being disrespectful to dispatchers, speeding in a personal vehicle, not wearing a seat belt, etc.)
- Reporting requirements
- Multiple hours of onboarding meetings detailing rules and policies, including mandatory videos and tests
- A requirement to submit logs daily
- GPS tracking
Additionally, owner-operators had to sign a non-negotiable contract. STG could unilaterally reissue the provision in the contract determining compensation each quarter. Owner-operators were unable to negotiate rates.
Plaintiffs in the case argued that they should have been classified as employees rather than owner-operators. Consequently, they said, STG Logistics owes them unpaid wages for time waiting at facilities, mandatory safety meetings and other time spent performing work. Drivers also sought compensation for business expenses (scale tickets, fuel, maintenance, GPS devices) and unlawful deductions (insurance, IFTA, use of DOT number).
Rather than take the case to trial, STG Logistics decided to settle and eliminate the owner-operator model from its California operations. More than 400 former owner-operators will split the $4.2 million settlement. After attorney fees, that comes to more than $7,500 per driver.
Not STG Logistics’ first rodeo
The California lawsuit argued that STG Logistics was aware of its misclassification of drivers, having settled similar lawsuits and one pending in New Jersey.
The most recent lawsuit was filed by the state of New Jersey. Last December, the New Jersey Department of Labor and Workforce Development filed a complaint against STG Logistics, accusing it of misclassifying drivers.
New Jersey’s lawsuit was very similar to the California lawsuit in how it described STG Logistics’ control over owner-operators. Both lawsuits accounted for the fact that the company’s practice of misclassification was a continuation of what XPO Logistics Drayage was doing.
XPO sold its intermodal business to STG Logistics in March 2022. In addition to taking over operations, including drivers working for XPO, STG Logistics also assumed the liability for XPO’s past employment practices, which it continued after the acquisition.
In June 2022, the Los Angeles office of the National Labor Relations Board ruled that more than 250 port drivers in Southern California were misclassified as independent contractors. The drivers worked for STG Cartage LLC, doing business as XPO Logistics. The ruling paved the way for drivers to unionize.
In October 2021, XPO settled two California port driver lawsuits dealing with misclassification. The settlements totaled nearly $30 million and involved hundreds of drivers.
XPO Last Mile was ordered to pay nearly 4,000 California drivers $5.5 million in a wage lawsuit. The lawsuit claimed that XPO Last Mile failed to provide legally compliant meal and rest breaks and failed to pay wages for all hours worked, waiting time penalties, reimbursement of business expenses and legally compliant pay stubs, according to settlement documents. That lawsuit settlement was preceded by two similar lawsuits XPO settled for $20 million.
Even Congress has been questioning XPO’s treatment of drivers. In 2018, nearly 100 House members signed a letter asking the Committee on Education and the Workforce to launch an investigation into XPO’s practices, including the treatment of truckers. The letter came shortly after The New York Times published a scathing report about mistreatment of employees at an XPO warehouse. LL
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