Rideshare Company Fined for Misclassification

Uber has been fined $649 million by the state of New Jersey for misclassifying its drivers to avoid paying employment taxes in the state. The drivers, who performed work understood by the state as central to the ridesharing company’s business model, avoided the taxes by classifying the workers as contractors instead of employees.

The state’s Department of Labor and Workforce Development called on the company to make good on $530 million that went unpaid from 2014 to 2018 for unemployment and disability insurance. An audit of Uber and its subsidiary Raiser was used to calculate the amount of unpaid taxes, with an additional $119 million tacked on to account for accumulated interest.

Not an Isolated Case

This case is the first of its kind where a local government has sought back taxes from Uber, one of many app-based, service-for-hire companies that have transformed much of the way employees are regarded, compensated, and treated by tech companies in a new employment environment. Uber is disputing New Jersey’s claims, maintaining that the drivers are operating as independent contractors. States and towns across the country have been making the same case for years, saying that gig-based employment hurts workers.

The gig economy is big business. As such work arrangements have taken off, detractors of the employment model pointed to the ways in which workers are exploited by giant corporations who squeeze workers to increase profitability. It has been estimated that reclassifying drivers would likely increase labor costs by 20 to 30 percent.

Gig-Based Companies

In many areas, these gig-based companies are being regulated. California recently introduced a law that would require gig workers to be considered employees, a designation that would warrant their rights to minimum wage and unemployment insurance. Similar protections are being floated in New York, Oregon, and Washington State.

New York currently requires minimum wage for rideshare drivers, even as their jobs continue to lack employee status. The New Jersey State Senate is considering the issue of employee misclassification, looking at legislation under which current independent contractors would be reclassified as employees and would gain benefits, such as overtime pay, health insurance, and unemployment insurance.

Class action lawsuits across the country have been brought against ridesharing companies by drivers who make the case that their income sometimes comes in under the minimum wage rate, after considering costs to maintain and operate their vehicles. Drivers also point out that they are in no way independent contractors, since they would not be in business without their reliance on the rideshare company.

South Jersey Employment Lawyers at the Burnham Douglass Represent Misclassified Workers

If your employer has misclassified your job title to avoid paying the wages or benefits you deserve, you may have reason to file a suit to force the issue and receive proper compensation for your work. Speak to the South Jersey employment lawyers at the Burnham Douglass to discuss your case for free. Contact us online or call us for a free consultation. With offices in Marlton and Northfield, New Jersey, we represent workers throughout South Jersey, including Camden County, Burlington County, Gloucester County, Mercer County, and Atlantic County.

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