Uber, Subsidiary to Pay New Jersey More Than $100 Million in Back Taxes

Audits by the New Jersey labor department found the ride-sharing company had misclassified hundreds of thousands of drivers as independent contractors, the state said. As a result, Uber didn’t make mandated payments for unemployment, temporary disability and workforce development.

“There is no reason temporary, or on-demand workers who work flexible hours, or even minutes at a time can’t be treated like other employees in New Jersey or any other state,” said New Jersey Labor Commissioner

Robert Asaro-Angelo

in a statement Tuesday. 

Uber and other ride-hailing companies have long said that drivers and other gig-economy workers are independent contractors who prefer the flexibility that comes with the classification. Some lawmakers and labor groups say the classification deprives workers of benefits like healthcare and the ability to join unions.

An Uber spokesman said the agreement to pay New Jersey doesn’t change the company’s viewpoint, and Uber disagrees with the state’s assertions. 

“Drivers in New Jersey and nationally are independent contractors who work when and where they want—an overwhelming amount do this kind of work because they value flexibility,” Uber spokesman

Josh Gold

said in a statement.

In 2019, New Jersey asked Uber to pay nearly $650 million—$523 million in unemployment and disability insurance taxes and $119 million in penalties and interest—following a state audit examining company data from 2014 to 2018. 

New Jersey’s labor department said the audit didn’t include complete data since the company didn’t cooperate in the process. At the time, Uber said it would challenge the state’s “preliminary but incorrect determination.” 

The case then shifted to the state’s Office of Administrative Law and the estimate was revised to $100 million after Uber and Raiser shared more information, the department said. 

The audits followed legislation from Democratic Gov.

Phil Murphy’s

administration that strengthened the New Jersey Department of Labor and Workforce Development’s authority to penalize companies for misclassifying workers.

Lawmakers in several other U.S. states—as well as in the European Union—have sought to require gig-economy companies to reclassify these workers as employees. A California law enacted in 2019 requires employers using workers for hire to consider them employees, unless they pass a three-part test to classify them as independent contractors. 

Uber,

Lyft Inc.

and other companies that use independent contractors launched a campaign earlier this year to challenge efforts to reclassify the workers as employees. 

Write to Jennifer Calfas at [email protected]