Uber has agreed to pay Latest Jersey $100 million in back taxes after the state said the ride-hailing company had misclassified its drivers as independent contractors.
An audit by the state’s Department of Labor and Workforce Development had found that Uber and a subsidiary, Raiser, owed 4 years of back taxes because they’d classified drivers within the state as contractors relatively than employees. On Monday, the department announced that Uber had paid the taxes with interest.
“Our efforts to combat employee misclassification in Latest Jersey are continuing to maneuver forward,” Robert Asaro-Angelo, the department’s commissioner, said in an interview. “This shows that these employees in Latest Jersey are presumed to be employees. Regardless of what an organization’s business model or what their technology is, employees have rights.”
The settlement would seem like a retreat from the ride-hailing company’s repeated assertion that its drivers shouldn’t be classified as employees. Uber and other gig firms have for several years aggressively campaigned against efforts by lawmakers and the courts to categorise their drivers as employees. But an Uber spokeswoman said in a press release that the corporate’s stance had not modified.
“Drivers in Latest Jersey and nationally are independent contractors who work when and where they need — an amazing amount do this type of work because they value flexibility,” said Alix Anfang, the spokeswoman. “We sit up for working with policymakers to deliver advantages while preserving the pliability drivers want.”
The Latest Jersey Department of Labor and Workforce Development initially demanded payment of the back taxes from Uber in 2019, the primary time a neighborhood government had sought back payroll taxes from the corporate. The move was a major change in the best way states treated the employment practices at the center of “gig economy” firms like Uber.
Lately, states and cities across the country have tried to rein in gig-economy firms that depend upon inexpensive and independent labor. These efforts could reshape the business models of firms like Uber, however the legal landscape is removed from settled.
California and Massachusetts have laws requiring that gig employees be designated as employees if certain criteria are met. Mr. Asaro-Angelo said those laws followed the lead of Latest Jersey, which has similar protections on the books.
In 2019, when the state first demanded that Uber pay back taxes for misclassifying drivers, it said that the corporate and Raiser, the subsidiary, owed way over $100 million. An audit had uncovered that $530 million in back taxes had not been paid for unemployment and disability insurance from 2014 to 2018, in accordance with news reports. The state also demanded $119 million in interest.
After Uber contested the department’s findings, the case was transferred to Latest Jersey’s Office of Administrative Law. Eventually, the corporate agreed to pay a revised figure and to drop its appeal.
The department now says that its initial audit was an estimate made without Uber’s cooperation. Counting on employee payroll data supplied by Uber, a subsequent audit assessed Uber and Raiser owed a combined $78 million in back taxes plus penalties and interest of $22 million.
The payment covers as many as 91,000 drivers who’ve worked in Latest Jersey in considered one of the years covered by the settlement. It’s going to help provide advantages comparable to unemployment, temporary disability and family leave insurance.
Mr. Asaro-Angelo declined to say how the department would handle taxes that Uber may owe after 2018 or in the longer term. “Every yr, it seems, the Legislature and the governor are passing recent laws to make lives higher for employees and provides us more power to guard them,” he said.
