The GigReporter

Expect to be Investigated on Misclassification in New Jersey

Logistics companies in the State of New Jersey who engage independent contractor drivers should simply expect to be investigated for worker misclassification in the current environment. The New Jersey Department of Labor has stockpiled itself with an arsenal of statutory weapons to fight alleged worker misclassification. New Jersey already had what most consider to be an impassable ABC style independent contractor test but now the Department of Labor is operating with the authority (2021 statute) to bring punitive worker misclassification lawsuits against companies and impose treble (triple) damages for violators, on top of principal tax, penalty, and interest assessments.

Stemming from an investigation starting in 2019, the administration officially announced its agenda to take down big business when the commissioner, Robert Asaro-Angelo, commenced a lawsuit against STX Logistics, a trucking company, citing allegations of falsely categorizing more than 300 truck drivers as independent contractors.[1] The suit was filed Dec. 11, 2023, and removed to federal court on Jan. 12, 2024. The administration undoubtedly took notice of STX’s $700 million purchase of XPO, Inc’s intermodal business in March 2022, wherein the suit alleges drivers were required to maintain daily logs, affix company branded decals to trucks, take required assignments, take capped payment rates and  leaseback their commercial trucking vehicles with a restriction not to use vehicle to contract with other companies.[2] The state is clearly trying to send a message to companies by getting a verdict against STG Logistics.

Logistics companies operating in New Jersey should take notice of the government hostility and take great steps to document and negotiate contracts at arms-length with legitimate, well established owner operators. The inherent financial risks in the current political environment could be catastrophic.

• SCI is the leading TPA for independent contractors in the final mile delivery space. Please contact us with any questions regarding its services.

[1] Wake-Up Call: New Jersey Is Cracking Down on Worker Misclassification, http://Law.com , Charles Toutant, January 16, 2024.

[2] New Jersey sues trucking company accused of misclassifying truckers, Land Line, Tyson Fisher, December 14, 2023.