New Jersey sues trucking company accused of misclassifying truckers

The New Jersey Department of Labor and Workforce Development has filed a lawsuit against STG Logistics, claiming the trucking company has been misclassifying drivers as independent contractors.

On Monday, Dec. 11, New Jersey DOL Commissioner Robert Asaro-Angelo filed a complaint in a state superior court against STG Logistics and STG Drayage. The lawsuit accuses the trucking companies of hiring hundreds of truckers as independent contractors despite state laws indicating they were actually employees.

According to a news release, the STG lawsuit is the first such lawsuit under a 2021 law that allows the state to file suit in New Jersey superior court against employers who have misclassified workers.

The investigation leading to the lawsuit began when STG Drayage was XPO Logistics Drayage.

In March 2022, XPO sold its intermodal business to STG Logistics for more than $700 million. In addition to taking over operations, including drivers working for XPO, STG Logistics also assumed the liability for XPO’s past employment practices.

“When employers unlawfully and callously toss their workers into the ‘independent contractor’ category, they are not only depriving them of a steady paycheck, they are also stripping them of earned sick leave, workers compensation, minimum wage and more,” New Jersey Attorney General Matthew Platkin said in a statement. “These are national, profitable corporations with deep pockets who are padding their profits with illegal labor schemes, and they seem to have no plans to stop this kind of behavior.”

XPO driver misclassification

Problems with misclassification began when the drivers worked for XPO out of its Newark facility.

According to the lawsuit, XPO drivers performing work in and out of the company’s Newark facility signed an independent contractor agreement. As part of the agreement, drivers were required to obtain and maintain their own trucks at their own expense.

Despite owning their own trucks, drivers were required to lease their trucks to XPO for the company’s exclusive possession, control and use. That lease barred drivers from using their trucks for any other use, including providing services to other companies.

XPO drivers had to install electronic GPS tracking devices on their trucks. Those devices tracked the drivers’ location, vehicle motion status, miles driven and engine hours.

The independent contractor agreement also established the following:

• Drivers were required to maintain daily logs that included a trip record form, vehicle inspection report, delivery receipts and fuel receipts
• Trucks were required to affix and display XPO-branded decals
• All work assignments provided by XPO; drivers did not receive assignments directly from XPO clients
• Payment rates were set by XPO

In addition to the above independent contractor agreement provisions, XPO deducted, diverted and withheld millions of dollars from the drivers’ pay for various items including fuel, tolls, parking, taxes, liability insurance, fees and truck maintenance and repairs.

In some cases, XPO withheld or deducted money that was more than a driver’s entire gross pay, resulting in a negative net pay. In other instances, drivers were paid less than New Jersey’s minimum wage.

Investigation into XPO’s employment practices

The New Jersey Department of Labor has been looking into XPO’s treatment of independent contractors for several years.

The state Department of Labor’s Division of Wage and Hour Compliance launched its investigation into XPO in 2019. During the investigation, the state requested that XPO hand over certain documents, including settlement sheets that recorded compensation, deductions, withholdings, pick-up locations, delivery dates and distance traveled by drivers.

Requests for those settlement sheets were made in February 2019, April 2019, November 2019 and February 2020. XPO never produced the documents. According to the complaint, XPO did not respond to the Department of Labor at all from February 2020 through May 2020.

A subpoena compelled XPO to produce the requested documents in September 2020.

The investigation was ongoing when STG bought XPO’s intermodal business, which included the Newark facility operations. Per the purchase agreement, STG assumed liability for certain XPO practices. The agreement specifically identified the investigation as a liability assumed by STG. Despite the ongoing investigation, STG continued the same employment practices as XPO.

History of driver mistreatment

This is not STG nor XPO’s first rodeo when it comes to alleged mistreatment of its truck drivers.

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