The State of New Jersey has just demanded that Uber pay $649 million for unpaid employment taxes for its drivers. The State argues that the company has misclassified Uber drivers as independent contractors instead of rightfully classifying them as employees, which has resulted in years of unpaid taxes.
The New Jersey Department of Labor and Workforce Development recently audited the company and found that $530 million was owed by the company in back taxes for not paying for unemployment and disability insurance from 2014 to 2018. Another $119 million in interest was added on top of the $530 million because of the nonpayment.
Though this case certainly represents a major escalation in how states view the practices of the app-based companies, this isn’t the first time that the classification of Uber’s drivers has been the subject of controversy. In fact, this distinction between independent contractors and employees is being widely debated nationwide, especially as it relates to ride-sharing companies. Earlier this year, the State of California passed a law that would reclassify the drivers of companies like Uber and Lyft as independent contractors, not employees, in order to afford them more protection by Federal and State regulations.
Alix Anfang, a spokeswoman at Uber, stated that the company did not agree with New Jersey’s findings, and would continue to fight them. “We are challenging this preliminary but incorrect determination because drivers are independent contractors in New Jersey and elsewhere,” she stated.
The New Jersey legislature is taking up legislation that could crack down on the classification of workers as independent contractors. Similar legislation has taken root in states across the country like New York, Oregon, and Washington State. Misclassifying employees as independent contractors means that those workers are not afforded the same type of protections under Federal law that would be available to them if they were categorized as employees, such as the Fair Labor Standards Act (“FLSA”), which regulates minimum wage and overtime.
The attorneys at Forester Haynie, PLLC handle employment litigation specializing in cases surrounding the FLSA and minimum wage and overtime. If you think you or someone you know has been wrongly classified as an independent contractor instead of an employee, contact us at foresterhaynie.com or call us at 214-210-2100.