STG Logistics Settles $2.2M Drayage Driver Misclassification Case

STG Logistics has resolved a worker misclassification case with New Jersey state agencies, resulting in a $2.2 million payout to affected drayage drivers, with an additional $555,000 directed to state unemployment and disability funds. The settlement, valued at over $80.9 million in total, represents a landmark enforcement action, the first filed under New Jersey's 2021 misclassification law, and signals heightened regulatory scrutiny over contractor classification practices in the logistics industry. The timing is particularly significant as New Jersey codifies its ABC test on October 1, establishing stricter standards for determining independent contractor status.

The case traces back to 2019 when the drayage operations were part of XPO Logistics before being sold to STG in 2022. Regulators determined that STG failed to meet any prong of the ABC test, citing factors such as mandatory company branding on trucks, exclusive leasing arrangements, controlled route assignments, and electronic monitoring, all indicators of employment control rather than true independence. For supply chain professionals and carriers, this settlement underscores the rising cost of contractor misclassification and the compliance complexity ahead as states implement stricter worker classification rules.

The case raises industry tensions, particularly around federal branding requirements that state labor departments may view as evidence of control. Carriers operating in New Jersey and other states adopting similar ABC standards face potential operational restructuring and elevated compliance risk if they continue current independent contractor arrangements.