Uber has paid the state of New Jersey a record $100 million in back taxes for depriving thousands of drivers of benefits by misclassifying them as independent contractors, the state’s labor department said.
Uber and subsidiary Rasier LLC paid $78 million, plus $22 million in penalties and interest, to make up for past-due contributions toward unemployment, temporary disability and workforce development, the New Jersey Department of Labor and Workforce Development announced Tuesday. The payment covers 297,866 drivers, the department said.
The misclassification scheme deprived the drivers “crucial safety-net benefits such as unemployment, temporary disability and family leave insurance,” according to the labor department.
“For over a century, our governors, legislatures and voters have made New Jersey one of the best states for workers. We will not bow to the whims of corporations’ latest business models that are based on eroding long-standing protections,” Labor Commissioner Robert Asaro-Angelo said.
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The payment is the culmination of a state audit of Ubers’ books between 2014 and 2018. The audit originally assessed $523 million in contributions owed, plus penalties and interest of up to $119 million, the labor department said. However, that assessment was based on incomplete data because Uber and Raiser didn’t cooperate with the investigation and failed to share payroll data, according to the department.
After the companies contested the findings, they provided more data, leading to the revised $100 million figure, the labor department said.
In an email, the rideshare company told NBC10 that the labor department didn’t disclose that it originally asked for more than $1 billion from Uber and Raiser. It provided two March 2019 notices that it said were from the NJDLWD, both of which said Uber and Raiser each owed about $522 million.
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NBC10 reached out to the labor department to ask why it publicized an original combined assessment of $523 million instead of $1 billion. The department did not respond.
Uber reiterated that it believes its drivers are independent contractors and that it disagrees with the state classifying them as employees.
“While the original audit determined Uber owed more than $1 billion, we are glad to put this issue behind us, pay the state about $100 million as our drivers remain independent contractors who can work where and when they want,” Uber spokesman Josh Gold said.
The New Jersey branch of the American Federation of Labor and Congress of Industrial Organizations praised Gov. Phil Murphy’s administration for enforcing laws against misclassifying workers.
“This illustrates that the gig is up, companies that intentionally misclassify employees in order to increase their profits at the expense of worker rights are now on notice – this unlawful practice is not tolerated here in New Jersey,” New Jersey State AFL-CIO President Charles Wowkanech wrote in a statement.
