Uber may have built its great empire, in part, from notoriously skirting the past local laws and regulations, but at least one state is finally forcing the company to pay.
On Tuesday, Uber agreed to pay New Jersey $ 100 million in back taxes for claims that the company misclassified thousands of drivers as independent contractors between 2014 and 2018. That mischaracterization, according to an audit conducted by the Department of the New Jersey labor and workforce development may have prevented thousands of workers from receiving critical resources such as unemployment, disability, and family leave insurance. While strictly focused on New Jersey workers, the payment potentially marks a turning point for drivers across the country who, for years, have disproved Uber’s label of them as so-called “gig workers.”
“We will not tolerate companies that misclassify their workers, thereby denying employees vital benefits and avoiding their obligation to contribute to programs that benefit the workforce,” New Jersey interim attorney general Matthew Platkin said in a statement. declaration. “By misclassifying workers, companies harm their employees and evade their obligations under the law. New Jersey will continue to apply our employee misclassification laws aggressively to prevent such conduct. As the economy changes, we will vigorously defend workers’ rights. “
The $ 100 million fine is reportedly the largest of its kind ever recorded in New Jersey, but in reality it could have been much larger. The original audit of the Department of Labor sought over $ 1 billion in back taxes when he fined the company for the first time in 2019 under the dealfromng to documents sent to Gizmodo by Uber. In total, the agency originally claimed that Uber and Raiser (a subsidiary of Uber) owed $ 522 million and $ 528 million, respectively. In hindsight, the Department of Labor says those figures were “rough estimates based on incomplete data.” Uber eventually agreed to pay $ 12.1 million while Raiser paid $ 88 million.
Despite accepting the fine, Uber said it didn’t amount to a deal. Uber is also loyal to concert classification jargon.
“Drivers in New Jersey and nationwide are independent contractors who work when and where they want – an overwhelming amount do this type of work because they value flexibility,” Uber said in a statement sent to Gizmodo. “We look forward to working with policy makers to deliver benefits while preserving the flexibility drivers demand.”
Robert Asaro-Angelo, the New Jersey labor commissioner, strongly opposed this position in a statement.
“Let’s be clear: there’s 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,” Asaro said. -Angel. “We will not bow to the whims of the latest business models of companies that rely on the erosion of long-standing protections.”
New Jersey’s historic fine comes like other states in the country grab with legislation aimed at countering, or in some cases facilitating, the gig work economy. In 2020, California narrowly passed a controversial voting initiative backed by a concert company called Proposal 22 which sought to overturn labor laws that require companies like Uber to classify workers as employees. Uber, Lyft, Doordash and similar companies created the initiative and have reportedly spent more than $ 200 million to push the measure forward. Fortunately for the state’s gig workers, a California judge struck down the proposal last year for constitutional reasons.
Unconstitutional or not, this hasn’t stopped other states from trying to create their own legislation modeled on the Prop 22, though so far, those have yet to truly materialize. Earlier this year, gig companies are working reportedly spent $ 17.8 million to switch to ballot initiative in Massachusetts, which would have formally classified gig workers as independent contractors rather than employees. That initiative failed after the state Supreme Court declared the proposal unconstitutional, in part due to its “loosely worded provisions”. In other states like New York, however, gigwork companies are making fun ofer approach and are reportedly negotiate with major unions to allow workers to organize for some issues such as minimum wage, but under the formal classification of independent contractors.
Now, with Uber licking its wounds in New Jersey, the state ecosystem once deemed ripe for interference from concert companies suddenly seems less vulnerable. Other states less favorable to the business model behind gig work could potentially follow The New Jersey advantage, which would create a huge headache for dozens of companies that rely on ill-defined labor. More critically, aggressive regulatory actions by states could put money and resources back into the pockets of gig workers. About 16% of US adults interviewed from Pew Research said last year they made money through some kind of concert platform.