New Jersey independent contractors who haul freight under STG Drayage’s operating authority were notified Monday that they will no longer be tendered loads beginning in late November unless the truckers get their own authority through the Federal Motor Carrier Safety Administration and meet other requirements.
“After careful consideration of shifting market conditions and changing legal landscapes, STG Drayage plans to cease doing business in New Jersey with independent contractor owner-operators who operate under STG Drayage’s federal motor carrier operating authority as early as November 27,” according to the STG notice.
For drivers who want to bid on freight through STG Drayage’s property-broker affiliate, STG Transportation Solutions, they must obtain their own operating authority, fulfill various insurance requirements, and have proper placards on their tractor(s) reflecting that they have active motor carrier authority, register tractor(s) under the Uniform Carrier Registration system, and obtain proper permits, plates, and registration cab cards, and hire drivers with commercial-vehicle licenses that meet FMCSA requirements.
As of publication Friday, STG Logistics replied “no comment” to FreightWaves’ request seeking comment to its business-operations agreement with its New Jersey drayage drivers.
In December 2023, the New Jersey Department of Labor and Workforce Development Commissioner Robert Asaro-Angelo and New Jersey Attorney General Matthew J. Platkin filed the first lawsuit under a 2021 law that permits the state to file suit in New Jersey Superior Court against employers who have allegedly misclassified workers as independent contractors.
According to the state’s complaint against STG Logistics and STG Drayage, the suit “seeks to halt the companies’ alleged practice of misclassifying drivers as independent contractors and to recover up to millions in back wages, penalties and fines for more than 300 truck drivers.”
The lawsuit also seeks damages for the companies’ alleged improper deductions from drivers’ pay.
The state’s attorney general’s office said that it had no comment due to “pending litigation” against the STG companies.
STG Logistics is a privately held California company headquartered in Bensenville, Illinois, while STG Drayage, a subsidiary of STG Logistics, is a Delaware limited liability company. Paul Svindland serves as CEO of STG Logistics. He declined to comment on the notice sent to STG’s New Jersey drayage drivers.
New Jersey’s labor law requires companies that hire independent contractors to use the “ABC test,” a three-pronged test to determine whether its workers are actually employees.
Trucking companies in New Jersey must prove that a driver is free from the control and direction of the hirer in connection with the performance of the work; the worker performs work that is outside the usual course of the hiring entity’s business; and the worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity.
The state’s DOL misclassification investigation initially focused on XPO Logistics Drayage drivers. However, XPO sold its intermodal operations to STG Logistics, owned by private equity investment firm Wind Point Partners, for around $700 million in 2022. As part of the purchase, XPO “assumed the liability for the seller’s past employment practices,” according to the NJDOL’s statement about the lawsuit.
Drayage drivers were required to purchase the trucks in their own names, according to the lawsuit, but were required to lease the trucks back to XPO. The suit alleges that the drivers had to display the company’s signage on their trucks despite the drivers paying for all of their expenses, including fuel. However, the drivers were prohibited from using their trucks to work for other companies without XPO’s written consent.
“When employers unlawfully and callously toss their workers into the ‘independent contractor’ category, they are not only depriving them of a steady paycheck, [but] 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 after the lawsuit was filed. “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.”
According to the statement, in August 2020, XPO paid the state nearly $894,000 “to resolve a prior NJDOL audit finding it failed to make required contributions to the Unemployment Compensation and Disability Benefits Funds from 2015 through 2018.”
In July, a New Jersey-based trucking company, Horseless Carriage Carrier of Paterson, which hauls luxury cars, agreed to pay a total of $455,000 in backpay and penalties. Eight drivers will receive $364,000 in unpaid wages, according to settlement agreement reached with the NJDOL over allegations the carrier misclassified its drivers as independent contractors.
In 2022, Horseless Carriage Carrier was sold to McCollister’s Global Service. Frank Malatesta serves as the trucking company’s president.
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