TRENTON—A New Jersey shipping company has agreed to pay $7 million and reclassify over 1,000 delivery drivers as employees after state authorities found the firm improperly treated them as independent contractors for nearly two decades. 

PDX North Inc. will make a $5 million lump-sum payment to resolve outstanding unemployment and disability insurance liabilities dating back to 2006. The settlement marks one of the largest worker misclassification resolutions in recent state history.

State Audits Uncover Improper Classification

The New Jersey Department of Labor and Workforce Development conducted four audits covering 2006 through 2019 that revealed the improper classification scheme. Auditors found PDX North had classified delivery drivers as independent contractors rather than employees. This arrangement denied workers access to unemployment benefits, temporary disability insurance, workers' compensation and other employment protections. The classification also allowed the company to avoid paying quarterly contributions to state insurance funds.

The case began when a PDX driver filed for unemployment benefits. The claim triggered a broader investigation into the company's employment practices. State auditors ultimately identified more than 1,000 drivers who had been misclassified during the review period. The original assessment, including unpaid contributions, interest and penalties totaled $7,863,855.76.

Federal Litigation and Settlement Terms

PDX North challenged the findings in federal court. The company argued that New Jersey's worker classification laws did not apply to its business model. The U.S. District Court rejected these arguments, and the U.S. Court of Appeals upheld the lower court's ruling. The United States Supreme Court declined to hear the case in 2021. The litigation then returned to New Jersey administrative proceedings in 2022.

The parties reached a settlement agreement on December 5, 2025. The deal required PDX to secure financing for a $5 million payment by March 5, 2026. The company met that deadline. An additional $2 million in penalties was suspended and will not come due if the company meets its obligations through January 1, 2029.

Under the settlement terms PDX must reclassify all delivery drivers as employees effective immediately. The company must pay quarterly unemployment and temporary disability insurance contributions starting in 2026. Full compliance with all employee classification requirements is required by January 1, 2027. PDX remains subject to state audits through January 1, 2029.

The reclassification provides drivers with minimum wage protections, overtime pay, earned sick leave, unemployment insurance, family leave benefits, temporary disability coverage and workers' compensation. These protections were unavailable to the workers under the independent contractor arrangement. The settlement affects drivers who delivered automotive parts for PDX North's last-mile distribution operation.

Officials Emphasize Worker Protection

Attorney General Jennifer Davenport emphasized the broader impact of worker misclassification. "Misclassifying workers raises costs for workers, taxpayers, and law-abiding businesses, which many of them can hardly afford," Davenport stated. "Combating worker misclassification is a critical part of our efforts to make our state more affordable for all New Jerseyans." She noted that the resolution ensures workers receive the protections they deserve while holding PDX accountable for its misconduct.

Acting Labor Commissioner Kevin D. Jarvis highlighted the importance of employer compliance. "This settlement reflects New Jersey's strong commitment to protecting workers and ensuring employers meet their legal obligations," Jarvis said. "Worker misclassification denies employees critical benefits and protections and undermines fair competition for businesses who follow the law." He noted that PDX is demonstrating a true commitment to following state worker protection laws by restructuring its operations.

The PDX settlement follows similar agreements with other New Jersey employers. The state previously reached settlements with Publishers Circulation Fulfillment, NJ Penn and Horseless Carriage for misclassifying delivery workers. These cases established precedents for treating delivery drivers as employees rather than independent contractors. The PDX case represents a significant escalation in the financial penalties assessed for these violations.

New Jersey continues to aggressively pursue worker misclassification cases. The state sued Amazon in October 2025, alleging that the company misclassified Flex delivery drivers as independent contractors. That litigation remains pending. The PDX settlement may influence the state's negotiating position in the Amazon case. It also sends a signal to other employers that misclassification carries substantial financial consequences.

The settlement does not resolve potential private litigation by affected drivers. Workers may still pursue individual claims for unpaid wages or benefits. The state agreement does not include back pay for the misclassified workers. The $5 million payment covers only state insurance fund liabilities and penalties.

PDX North specializes in last-mile delivery of automotive parts. The company operates distribution routes throughout New Jersey. The reclassification requirement will significantly increase the company's labor costs. Employers typically pay payroll taxes, insurance premiums and benefits costs for employees that do not apply to independent contractors. The financial impact could affect PDX's competitive position in the logistics market.

The New Jersey Department of Labor and Workforce Development will monitor PDX's compliance closely. Deputy Attorneys General Nadya Comas, Yael Fisher and Geoffrey McGee represented the department in negotiations. They were supervised by former Labor Enforcement Section Chief Eve E. Weissman, Special Assistant Pavithra Angara, Assistant Attorney General Mayur P. Saxena and Deputy Director Sara M. Gregory.

Sources

• New Jersey Department of Labor and Workforce Development, "NJ Department of Labor and Attorney General's Office Secure 7 Million Settlement with PDX North for Misclassifying Workers" (March 12, 2026)

• Shore News Network, "NJ hits shipping company with7 million settlement for misclassifying delivery drivers" (March 14, 2026) 

• RLS Media, "Company Must Pay $7M for Allegedly Misclassifying Over 1,000 NJ Delivery Drivers" (March 13, 2026) 

• New Jersey Law Journal, "Settlement Reached with Shipping Firm Over Worker Classification" (March 13, 2026)