Uber Pays $100M to NJ After Misclassification of Nearly 300k Drivers


Uber Pays $100M in Driver Misclassification Case with NJ Department of Labor.

Uber Technologies Inc. and a subsidiary have paid $100 million to the New Jersey Department of Labor and Workforce Development’s Unemployment Trust Fund after an audit discovered that the ride-share company improperly classified hundreds of thousands of drivers as independent contractors.

This designation deprived Uber drivers of crucial safety-net benefits such as unemployment, temporary disability, and family leave insurance. Additionally, Uber failed to make required contributions toward unemployment, temporary disability, and workforce development.

This $100 million payment follows NJDOL audits that assessed Uber and its subsidiary Raiser LLC a combined $78 million in past-due contributions plus penalties and interest of $22 million. This is the largest such payment ever received in New Jersey, covering 297,866 drivers.

These companies often repeat the false premise that being an employee stifles flexibility, which is just not true,” said Labor Commissioner Robert Asaro-Angelo. “Let’s be clear: there is no reason temporary, or on-demand workers who work flexible hours, or even minutes at a time can’t be treated like other employees in New Jersey or any other state.”

When a worker is misclassified as an independent contractor, they lose the rights that employees are entitled to including minimum wage, overtime pay, workers’ compensation coverage, unemployment insurance, earned sick leave, family leave, or other benefits. Additionally, misclassification means these workers are not protected by workplace safety laws, equal pay protections, and a host of other employment-related rights often taken for granted.

Employers who misclassified employees as independent contractors skip their contributions to the Unemployment Insurance trust fund, leaving every other employer in the state to pay for their delinquency.

Per federal standards, New Jersey and every other state is required to audit one percent of businesses each year for compliance with unemployment insurance contribution requirements. The Department of Labor may also audit a company if a complaint is filed, or if workers seek unemployment or disability benefits and there is no record of their employer having contributed to those benefit funds.

In the audit of Uber and its subsidiary, NJDOL examined the companies’ books over a five-year period, 2014-2018. Uber was originally assessed a combined $523 million in past-due contributions plus penalties and interest of up to $119 million, but those figures were based on rough estimates of incomplete data because Uber did not cooperate and share its complete payroll during the audit.

Uber and its subsidiary contested the NJDOLs findings, and the case was transferred to New Jersey’s Office of Administrative Law. The companies have now paid a revised assessment of $100 million, based on additional information provided by Uber and Rasier post-initial assessment.

All contributions, penalties, and interest received as a result of this payment are returned to the funds used to pay worker benefits and to cover related expenses of administering and protecting the trust fund for all NJ workers and employees.

Three years ago, Gov. Murphy signed a package of bills expanding NJDOL’s authority to combat worker misclassification. More recently, the Legislature and Governor Murphy again expanded the agency’s powers by allowing it to impose a penalty requiring employers to pay misclassified workers an additional 5 percent of their gross wages from the previous 12 months.

This historic case serves as a reminder to employers and workers that New Jersey law applies to anyone doing business and working in New Jersey.

Misclassified workers are not at fault and can find information about their rights and protections here.

Businesses can learn about legal requirements and services provided to them here.

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