After years of litigation, PDX North, Inc., a last-mile automotive parts distribution company, has agreed to pay up to $7 million to resolve worker misclassification violations involving its delivery drivers, announced New Jersey officials.
The settlement brings to a close a case that has seen PDX lose challenges to the state’s worker classification laws in federal district and appeals courts before the U.S. Supreme Court declined to hear the firm’s final appeal.
According to the New Jersey Department of Labor and Workforce Development and the New Jersey Attorney General, PDX has agreed to reclassify its delivery drivers as employees to comply with state law. The state says more than one thousand delivery drivers were misclassified as independent contractors and thus deprived of the rights and benefits of New Jersey’s worker protection laws.
Also, under the agreement, beginning this year, PDX will pay into the state’s unemployment compensation and disability benefits funds and make all required filings.
By January 1, 2027, PDX has agreed to come into compliance with state laws so that all of its 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.
State officials said the agreement will help “level the playing field in the last-mile trucking and delivery sectors” because businesses that misclassify their workers “undercut their competitors following state labor laws.”
Background of the Case
The agreement resolves four state audits covering the years 2006 through 2019, which determined that PDX improperly classified delivery drivers as independent contractors rather than employees in violation of state laws. The original assessments totaled $7,863,855.76 in unpaid contributions, interest and penalties.
State labor officials said the first audit was initiated after a PDX driver filed for unemployment benefits, triggering a review of the company’s employment practices. Subsequent audits, prompted by additional claims and ongoing review, found PDX’s drivers were misclassified across multiple years.
PDX sued in federal courts challenging New Jersey’s ability to apply its worker classification laws to its business. Both the U.S. District Court and the U.S. Court of Appeals dismissed the company’s claims, and the U.S. Supreme Court declined to hear the case in 2021.
Administrative proceedings then resumed before the New Jersey Office of Administrative Law in 2022. In December 2025, PDX executed a settlement agreement with the state that was contingent upon PDX securing financing for an initial lump-sum payment of $5 million to satisfy its outstanding unemployment and temporary disability insurance liabilities by March 5, 2026.
PDX has now met that condition, bringing the agreement, and all forward compliance terms, fully into effect, according to state officials
PDX further agreed to an additional $2 million in suspended penalties, which will not become due as long as PDX meets its obligations under the agreement through January 1, 2029. The obligations include paying all quarterly unemployment and disability insurance contributions and and underpayments and properly classifying all drivers as employees.
“Misclassifying workers raises costs for workers, taxpayers, and law-abiding businesses, which many of them can hardly afford. Combating worker misclassification is a critical part of our efforts to make our state more affordable for all New Jerseyans,” said Attorney General Jennifer Davenport.
Acting Labor Commissioner Kevin D. Jarvis said worker misclassification “denies employees critical benefits and protections and undermines fair competition for businesses who follow the law.”
Topics
New Jersey
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