Uber pays $100 million to New Jersey in driver status dispute

Uber paid the US state of New Jersey $100 million in back taxes and fines for labelling nearly 300,000 of its drivers as self-employed and withholding required benefits; however, this is only a fraction of the $1 billion initially demanded by the state

By AFP

Published: Sep 14, 2022 11:29:00 AM IST

Updated: Sep 14, 2022 12:06:46 PM IST

Whether to classify drivers for ride-sharing companies as employees or independent contractors has long been a matter of debate among business and government representatives, with no clear consensus emerging thus far. Image: Shutterstock

New York, United States: Uber paid the US state of New Jersey $100 million in back taxes and fines for labelling nearly 300,000 of its drivers as self-employed and withholding required benefits, officials said Tuesday.

The ride-sharing giant, however, insisted that its drivers were indeed independent contractors and said it only paid a fraction of the $1 billion initially demanded by the northeastern state.

The payment stems from a government audit of Uber's operations in New Jersey between 2014 and 2018, which concluded that the company had improperly classified its drivers as independent workers.

Because of that, the New Jersey Department of Labor said in a statement, Uber drivers lost the rights to a minimum wage, overtime pay, unemployment insurance, earned sick leave, family leave and other benefits.

"We will not tolerate companies that misclassify their workers, thereby denying employees vital benefits and dodging their obligation to contribute to programs that benefit the workforce," said the state's acting attorney general, Matt Platkin.

Also read: Uber reports $2.6 billion loss, but revenue spike cushions blow

New Jersey Labor Commissioner Robert Asaro-Angelo said job flexibility shouldn't come at the expense of social benefits.

"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," he said in a statement.

Uber defended its stance Tuesday.

"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," the company said in a statement to AFP. "We look forward to working with policymakers to deliver benefits while preserving the flexibility drivers want."

It was unclear whether New Jersey authorities still considered Uber to be in violation for its activities in the years after the audit.

The New Jersey Department of Labor did not immediately respond to an AFP request for comment.