The agreement resolves New Jersey’s first lawsuit under its 2021 worker-misclassification enforcement law. A bankruptcy case makes the settlement’s $80.9 million gross figure substantially larger than the guaranteed payment.
NEWARK, NJ – Hundreds of truck drivers are set to share $2.22 million under a settlement resolving state allegations that STG Logistics and related companies improperly treated drivers as independent contractors.
The agreement, announced July 29, resolves the first Superior Court lawsuit brought under a 2021 New Jersey law allowing the state to sue employers over worker misclassification.
“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 Department of Labor and Workforce Development began investigating STG’s predecessor, XPO Logistics, in 2019, focusing on an intermodal facility at 283 Wilson Avenue in Newark. STG purchased XPO’s New Jersey intermodal business in 2022 and assumed responsibility for the earlier employment practices.
The state alleged that the companies controlled drivers’ work while denying them protections available to employees. According to the Labor Department, drivers were required to display the company name on their trucks, lease vehicles for the company’s exclusive use, install GPS tracking devices, accept assigned routes and work under company-set payment rates.
The state also alleged that the companies deducted fuel, tolls, parking, insurance and maintenance costs from drivers’ compensation. In some pay periods, the deductions allegedly exceeded a driver’s gross earnings, producing negative net pay.
STG and the other defendants denied the state’s substantive allegations in their response to the lawsuit. The settlement ends the litigation without a trial.
The immediate priority payment is $2,775,000:
- $2,220,000 will be distributed among eligible drivers.
- $555,000 will go to New Jersey for wage-and-hour penalties and contributions to unemployment and temporary-disability funds.
Eligible drivers are people who operated under the defendants’ motor-carrier authority from January 1, 2017, through the agreement’s effective date but were not treated as employees under New Jersey employment laws.
Payments will be calculated proportionally using each driver’s earnings during that period. The agreement calls for lump-sum payments within 90 days after STG’s Chapter 11 reorganization plan becomes effective. The confidential recipient schedule must first be reviewed by the Labor Department.
The executed agreement describes a $80,912,000 gross settlement obligation, but that number is not a guaranteed cash recovery. It includes $70,637,000 in general unsecured claims that will receive whatever treatment is available through the bankruptcy plan. Another $7.5 million is suspended and becomes payable to the state if the defendants materially violate the settlement and fail to cure the breach.
That distinction makes the priority payment the clearest measure of the immediate recovery: at least $2.775 million, including the $2.22 million designated for drivers.
Going forward, the defendants must treat drivers working under their motor-carrier authority as employees when New Jersey law requires it. The agreement also establishes reporting and record-retention requirements through April 2028.
The settlement does not prevent current or former drivers from bringing their own private claims.