NJ slams company with $7M settlement over pay for 1,000 workers

💰 NJ reaches a $7 million settlement with delivery company PDX North over misclassifying more than 1,000 drivers.

🚚 Drivers were labeled independent contractors for years, allegedly denying them overtime, benefits and protections.

⚖️ The company must reclassify drivers and comply with state labor laws by 2027.

TRENTON — State officials have reached a massive $7 million settlement with a company accused of misclassifying their delivery drivers as independent contractors — dodging payment of overtime, sick days and family leave.

The historic settlement with PDX North and the state Attorney General’s Office, as well as labor officials, wraps years of contentious lawsuits.

PDX is a “last-mile” or same-day shipper of wholesale auto parts in New Jersey and other East Coast states. More than 1,000 delivery drivers were misclassified as independent contractors over the course of four audits spanning 2006 through 2019, state Attorney General Jennifer Davenport said.

The state started its first audit after a PDX driver filed for unemployment benefits, triggering a comprehensive review of the company’s employment practices.

Audits found more than 1,000 drivers affected over many years

Following audits, prompted by additional claims and ongoing review, PDX's drivers were misclassified across multiple years.

In addition to the settlement, PDX has agreed to reclassify its delivery drivers as employees to comply with state law. Beginning this year, PDX will pay into the state’s unemployment compensation and state disability benefits funds and make all required filings.

By Jan. 1, 2027, PDX has agreed to come into compliance with all state wage, benefit and tax laws, meaning the drivers will be eligible for protections, including minimum wage and overtime laws, earned sick leave, unemployment benefits, family leave and temporary disability benefits, and workers’ compensation coverage.

Settlement follows years of court battles

Both the U.S. District Court and the U.S. Court of Appeals dismissed the company’s claims and the Supreme Court declined to hear the case in 2021.

Administrative proceedings then resumed at the state level in 2022.

On Dec. 5, the state Department of Labor and PDX reached a settlement agreement, as long as PDX secured financing for an initial lump-sum payment of $5 million by March 5.

NJ also targeting gig economy driver classification cases

Under the settlement, PDX’s $5 million payment covers outstanding unemployment and temporary disability insurance liabilities from the audited periods through last year.

An additional $2 million in suspended penalties, which will not become due as long as PDX meets its obligations through Jan. 1, 2029.

The settlement obligations include:

🔺Paying all quarterly unemployment insurance/temporary disability insurance contributions and related filings as they become due, effective immediately

🔺Paying any underpayments of unemployment insurance/temporary disability insurance contributions identified by NJDOL’s Division of Employer Accounts

🔺Beginning in 2027, properly classifying all drivers as employees under all State wage, benefit and tax laws enforced by NJDOL

Under the agreement, PDX shall remain subject to NJDOL audits to ensure ongoing compliance.

The PDX settlement represents the latest victory for transportation and logistics workers obtained by the labor department and the Office of the Attorney General.

The State secured similar settlements involving misclassified newspaper delivery workers, with Publishers Circulation Fulfillment and NJ Penn, as well as Horseless Carriage, a Paterson-based luxury car shipping firm.

Read More: Understanding NJ's lawsuits against Amazon's labor practices 

Amazon sued for misclassifying Flex drivers as independent contractors

In October, the state sued Amazon for similarly misclassifying its Flex delivery drivers as independent contractors.

The company was also accused of shirking its legal requirement to pay into state funds for unemployment and disability benefits.

A state investigation began after Flex drivers began to apply for unemployment and temporary disability benefits.

On a case-by-case basis, some were awarded benefits, even though Amazon has not contributed to the required state funds for these workers.

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