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New Jersey Labor Department Seeks $640M from Uber for Misclassifying Workers

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As trusted wage and hour law violation attorneys working with clients in Camden County and beyond, The Law Offices of Morgan Rooks, PC understands the importance of defending workers’ rights. Our firm took an interest in an allegation made by the state of New Jersey against Uber this November.

New Jersey’s labor department seeks more than $640 million from Uber in taxes and penalties, saying the ride-sharing operation misclassified drivers as independent contractors. The department informed Uber that the company owes $523 million in overdue taxes from the last four years and fines and interest up to $119 million, according to letters from the department that were reported by Bloomberg Law in early November. This action for restitution is considered a victory for those who support better working conditions for Uber drivers since many of them work long hours and rely on the ride-sharing app as their primary source of income.

Uber denied the allegation, challenging the “incorrect” determination and claiming its drivers to be independent contractors in New Jersey and elsewhere.

Why Is Worker Classification Important?

New Jersey has strict qualifications for determining whether a worker qualifies as an independent contractor. To be considered as such, the worker must meet all three prongs of a test conducted under state law, including that services performed fall outside the employer’s normal course of business.

Many employment laws cover only employees, and misclassification of workers as non-employees denies the workers of these laws. If a court or government agency determines that an employer has misclassified workers as a non-employee, the employer can face penalties for violations. The employer’s risk includes a failure to provide FMLA leave, job reinstatement, and health benefits as required by the FMLA. When independent contractors file for benefits, taxpayers are footing the bill for unemployment, disability insurance, and more.

The Case at Hand

The N.J. Department of Labor and Workforce Development declined to reveal if it was after comparable restitution from Lyft or other “gig economy” companies. Lyft, another San Francisco-based ride-sharing service, declined to comment.

“It adds the black clouds over Uber, Lyft, and the overall gig economy, as their business models were built on contractors,” said Dan Ives, managing director at Wedbush Securities. “It’s an absolute nightmare scenario that continues to plague the gig economy stocks.”

The state of California, Uber and Lyft’s most significant revenue source, passed a law that requires such companies to classify drivers as employees and not independent contractors, which will give the workers crucial protections like minimum wage, health benefits and the ability to unionize. This law is scheduled to go into effect on January 1st, 2020, while Uber and Lyft continue to push for a carveout.
If you require a wage and hour law violation attorney in South Jersey or the surrounding areas, contact the Law Offices of Morgan Rooks, PC today.