After an audit revealed that the ride-sharing firm had incorrectly classified its drivers as contractors rather than regular workers, Uber made a payment of $100 million to the New Jersey Department of Labor.
Watch the video with $650 million problem:
The audit revealed that Uber and Rasier had to pay the state $22 million in penalties and interest in addition to $78 million in past-due contributions. According to NJDOL, the payment, which covers 297,866 drivers, is the biggest ever received in New Jersey.
According to state officials, Uber classified its drivers as contractors in order to deny them benefits, including unemployment, family leave, and disability insurance. As a result, the firm was initially sued by the government for about $650 million in back taxes in 2019.
“For over a century, our governors, legislatures and voters have made New Jersey one of the best states for workers,” Robert Asaro-Angelo, the state’s labor commissioner, said. “We will not bow to corporations’ latest business models that are based on eroding long-standing protections. Our policies protect and empower workers while strengthening businesses and the Murphy administration has given us the tools to protect our workforce and keep all employers accountable.”
Uber and its main rival, Lyft, have dominated the ride-sharing business for years. The issue with the drivers’ classification has long been questioned, according to Philly Voice.
Even though the New York State Labor Review Board determined in 2019 that drivers there were categorized as workers, Uber has kept seeing its drivers as independent contractors. A document from the National Labor Relations Board from the same year revealed that Uber drivers were independent contractors.
A tweet on NJ Labor Department’s said: “We support flexibility! But this issue is about fairness. NJ is a national leader in fighting worker misclassification as we’ve demonstrated through our gold-standard ABC Test, which has recently been affirmed by the NJ Supreme Court just weeks ago.”
Alix Anfang, a spokesperson for Uber, noted: “Drivers in New Jersey and nationally are independent contractors who work when and where they want — an overwhelming amount do this kind of work because they value flexibility. We look forward to working with policymakers to deliver benefits while preserving the flexibility drivers want.”
In its audit, NJDOL looked at Uber’s personnel files from 2014 to 2018. Due in large part to Uber and Raiser’s refusal to cooperate and release comprehensive payroll records, the department now claims that the initial assessment of a combined $523 million in past-due contributions was made using only “rough estimates based on incomplete data.”
The state will return all of the payments it has received to the funds used to pay employee benefits and to reimburse costs associated with the workers’ trust fund.
Gov. Phil Murphy signed a package of measures in July 2021 that gave NJDOL more power to combat labor misclassification. The law established a database that the government can use to monitor and get rid of misclassification. It also made it easier to find misclassified workers and impose stop-work orders at establishments and businesses when misclassification was discovered.
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