It seems neverending for the ride-hailing company – New Jersey’s Department of Labor and Workforce Development just announced Uber owes roughly $650 million in unemployment taxes and disability insurance, according to Bloomberg Law. That’s because drivers should be classified as employees instead of independent contractors.
Uber is opposing the fine saying “we are challenging this preliminary but incorrect determination because drivers are independent contractors in New Jersey and elsewhere.” The Department of Labour has been going after Uber since 2015, trying to get the company to pay employment taxes that now reach $523 million, plus $119 million in penalties and interest.
Driver classification is an issue for companies like Lyft and Uber not just in New Jersey. California just passed a law that comes in effect on the 1st of January, which would require the on-demand companies to reclassify their drivers as employees rather than independent contractors. New York, Oregon, and Washington state are regarding similar legislation.
Uber, Lyft and other tech companies have come together to oppose this law, raising more than $90 million for a ballot initiative intended to take the issue to voters next November.
The main idea behind companies like Uber is that drivers come in as independent contractors, leaving it for them to pay their health care and benefits, supply and maintain their cars. This type of labor is typically cheaper in taxes than regular employment.
Uber says the $650 million New Jersey tax fine is excessive based on what the companies revenue in the state. The ride-hailing company never disclosed how much it earned in the last four years in New Jersey, but its combined revenue for all the markets where it operated in 2018 was $11.3 billion.
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