New Jersey received a $100 million payment from Uber and a subsidiary, Rasier LLC, Sept. 12 stemming from a dispute over driver classification.
Following an audit, the state accused the ride-hailing companies of improperly classifying hundreds of thousands of drivers as independent contractors, which the state says deprived them of benefits such as unemployment, temporary disability, and family leave insurance. The state also says the companies thus failed to make required contributions toward unemployment, temporary disability and workforce development.
The $100 million payment, which goes toward the New Jersey Department of Labor and Workforce Development’s Unemployment Trust Fund, is the largest such payment New Jersey has ever received, covering 297,866 drivers. Uber and Rasier are paying a combined $78 million in past-due contributions plus penalties and interest of $22 million.
A bit of background
Uber has stressed that this payment is not a settlement and contends the premise of the state’s classification at the heart of the situation.
“Drivers in New Jersey and nationally are independent contractors who work when and where they want – an overwhelming amount do this this kind of work because they value flexibility,” an Uber spokesperson told NJBIZ. “We look forward to working with policymakers to deliver benefits while preserving the flexibility drivers want.”
However, state officials feel otherwise.
“These companies often repeat the false premise that being an employee stifles flexibility, which is just not true,” said Labor Commissioner Robert Asaro-Angelo. “Let’s be clear: 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.”
“We will not tolerate companies that misclassify their workers, thereby denying employees vital benefits and dodging their obligation to contribute to programs that benefit the workforce,” said acting Attorney General Matt Platkin. “By misclassifying worker, companies both harm their employees and sidestep their obligations under the law.”
The NJDOL says an audit of the companies’ books between 2014-2018 led to an original assessment of a combined $523 million in past-due contributions plus penalties and interest of up to $119 million. But, the department conceded that those figures were rough because of incomplete data. Uber and Rasier contested the original audit and the case was transferred to New Jersey’s Office of Administrative Law, which led to the revised assessment of $100 million.
Uber claims the state originally demanded more than $1 billion in its audit. So, the company says they are essentially paying ten cents on the dollar versus what the state had sought.
The NJDOL did not respond to a request for comment on that point at the time of publication.
“New Jersey has established itself as a national leader in fighting worker misclassification, as we’ve demonstrated through our gold-standard ABC Test,” Asaro-Angelo added. “This simple, three-pronged standard, which determines whether a worker should be classified as an employee or an independent contractor, has been affirmed by multiple court rulings, including by the New Jersey Supreme Court just weeks ago.”