New Jersey Says Uber Must Pay Up
Uber must pay $649 million in unpaid employment taxes and interest
in Uber Fined $649 Million for Saying Drivers Aren’t Employees, Matthew Haag and Patrick McGeehan report on the NJ case against Uber’s misclassification of its drivers as non-employees (although the title of the piece scrambles together back payments and interest):
New Jersey has demanded that Uber pay $649 million for years of unpaid employment taxes for its drivers, arguing that the ride-hailing company has misclassified the workers as independent contractors and not as employees.
The state’s Department of Labor and Workforce Development issued the request this week to Uber and a subsidiary, Raiser, after an audit uncovered $530 million in back taxes that had not been paid for unemployment and disability insurance from 2014 to 2018.
Because of the nonpayment, the state is seeking another $119 million in interest.
This follows the trends in other states, like California’s AB 5 law, which makes a similar assertion about misclassification of gig economy workers, and threatening to undo the economics involved in externalizing worker’s protections by gig economy companies generally, not just Uber and ride-hailing firms.
Back in September, I wrote about California’s AB 5 bill in Falling Back To Earth:
The bill is based on a 2018 CA Supreme Court ruling that determines that a worker must be classified as an employee if they perform a function central to a company’s business. So an accountant doing the books can be a contractor, but if your business is providing rides to passengers, the drivers are employees. Period.
New Jersey has taken up legislation similar to California’s AB 5, and New York City requires ride-hailing drivers to receive at least minimum wage.
Of course, the gig economy companies would like to drive some intermediate classification — a ‘dependent contractor’ that receives some benefits, but not full employment, and where the ride-hailing companies would not be obliged to pay for cars and insurance, for example — but that seems to be gaining no traction in these states.
I think we are witnessing the first phase of the undoing of the gig economy. Good riddance.