Uber Pays NJ $100M For Labor Violations Against 297K Drivers

NEW JERSEY — Uber and its subsidiary submitted a $100 million payment after an audit revealed the companies improperly classified hundreds of thousands of drivers as independent contractors in New Jersey. The money will go toward the state's Unemployment Trust Fund and nearly 297,866 drivers who state officials say were deprived of crucial benefits, officials announced Wednesday.

The New Jersey Department of Labor conducted audits that assessed Uber and its subsidiary Rasier LLC a combined $78 million in past-due contributions to the state fund, plus penalties and interest of $22 million. Uber and Rasier won't have to change the way they classify drivers.

Uber's misclassification of employees deprived them of benefits such as unemployment, temporary disability and family leave insurance, according to the labor department. The company also failed to make required contributions toward unemployment, temporary disability and workforce development, state officials said.

Although Uber agreed to the payment, they disagreed with the state's view that their New Jersey drivers are "employees."

"Drivers in New Jersey and nationally are independent contractors who work when and where they want," an Uber spokesperson told Reuters. " ... We look forward to working with policymakers to deliver benefits while preserving the flexibility drivers want."

In the audit, the state labor department examined the company books of both Uber and Raiser from 2014-18. They were originally assessed a combined $523 million in past-due contributions plus penalties and interest of up to $119 million. But state officials ran into issues.

"Those figures were rough estimates based on incomplete data, as allowed by law, because the companies did not cooperate and share their complete payroll records during the audit," said a news release from the NJDOL. "The companies contested the Department’s 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 from Uber and Rasier, which was more complete and more accurate than the initial data provided."

The $100 million payment will support worker benefits and cover related expenses of administering and protecting New Jersey's Unemployment Trust Fund. The classification of workers has been a sticking point in labor disputes involving Uber and other gig-economy services.

"These companies often repeat the false premise that being an employee stifles flexibility, which is just not true," said state 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."

Misclassified workers in New Jersey can find information on their rights and protections here.