New Jersey, my beloved home state and perpetual butt of regional jokes, scored a major win for drivers—one that could also cost the slumping rideshare company as much as $650 million in fines and unpaid taxes.
Considerable attention has been paid to Uber’s contractor arrangements with its drivers, which deprive them of basic worker protections like minimum wage and overtime pay. Local laws, like California’s recently-passed AB5, and country-wide rulings like one earlier this week in Uruguay, have sought to correct for this—but states themselves are also disadvantaged by Uber’s model. Specifically, this massive contractor workforce keeps the deeply unprofitable company insulated from paying taxes for unemployment and disability insurance.
As Bloomberg Law uncovered through a public records request, New Jersey has for years been hard at work trying to collect from Uber for those exact reasons. It assessed the amount that Uber and subsidiary Rasier LLC, which processes payments to Uber drivers, owed at $523 million, and it tacked on around $119 million in additional penalties and interest.
Reached for comment and Uber spokesperson told Gizmodo that ““We are challenging this preliminary but incorrect determination, because drivers are independent contractors in New Jersey and elsewhere.”
States being cheated out of taxes and workers struggling through precarious arrangements are, thankfully, parallel battles. For the purposes of collecting the aforementioned taxes, New Jersey’s Department of Labor made the determination that Uber’s rideshare drivers are, in fact, employees—which may be a prelude to determining full employee status for drivers in the state. Bhairavi Desai, executive director of the New York Taxi Workers Alliance, called the ruling “a stinging rebuke of the architects of the gig economy.”
New York drivers made similar inroads last summer, winning unemployment eligibility that July and a pay floor last December. Industry protections—in the form of a cap on the number of for-hire vehicles in the city—were voted in August of 2018 and extended a year later.
Uber’s home state of California still leads the fight in enforcement, however, passing the contentious AB5 bill in September, opening up rideshare companies (and other businesses) to strict legal challenges for worker misclassification. Lyft, Uber, and other allies still intend to fight the law’s implementation.
After the single worst IPO in history, Uber’s share price has continued to fall, hovering at $26.25 per share at the time of this writing—nearly half of what it debuted at nine months ago.
Updated with comment from Uber