State officials say more than 1,000 delivery drivers will be reclassified as employees after years of litigation.
Trenton, NJ – New Jersey officials announced a $7 million settlement with PDX North, Inc., a last-mile automotive parts distribution company, resolving allegations that the company misclassified more than 1,000 delivery drivers as independent contractors.
The agreement, announced Thursday by the New Jersey Department of Labor and Workforce Development and the Office of the Attorney General, follows years of audits and legal battles over the company’s employment practices.
Key Points
• PDX North will pay $7 million to resolve worker misclassification violations
• More than 1,000 delivery drivers were classified as independent contractors
• Company must reclassify drivers as employees and comply with state labor laws
Drivers to be reclassified as employees
Under the settlement, PDX has agreed to reclassify its delivery drivers as employees and begin complying with New Jersey wage, tax and benefit laws.
Officials said the change will make drivers eligible for minimum wage and overtime protections, earned sick leave, unemployment benefits, family leave, temporary disability benefits and workers’ compensation coverage.
Beginning this year, the company will also start paying into the state’s Unemployment Compensation and State Disability Benefits funds and submit required filings.
Case stemmed from years of audits
The settlement resolves four audits conducted by the Department of Labor covering the years 2006 through 2019.
Investigators determined that PDX improperly classified drivers as independent contractors in violation of New Jersey’s unemployment and temporary disability insurance laws. The original assessments totaled about $7.86 million in unpaid contributions, interest and penalties.
State officials said the first audit began after a PDX driver filed for unemployment benefits, prompting a broader review of the company’s employment practices.
Legal challenges delayed proceedings
After disputing the findings, PDX challenged the state’s worker classification laws in federal court.
The company’s claims were dismissed by both the U.S. District Court and the U.S. Court of Appeals, and the U.S. Supreme Court declined to hear the case in 2021. Administrative proceedings later resumed before the New Jersey Office of Administrative Law.
The settlement agreement was finalized in December and took effect after the company secured financing for a $5 million lump-sum payment earlier this month.
State officials highlight worker protections
Attorney General Jennifer Davenport said worker misclassification increases costs for workers, taxpayers and businesses that follow the law.
Labor officials said the agreement will help ensure fair competition in the transportation and delivery industry by requiring companies to follow the same labor standards.
Under the terms of the settlement, PDX must continue meeting reporting and contribution requirements and will remain subject to state audits through at least 2029 to ensure ongoing compliance.
