Can $100,000,000 Be A Good Deal– Ask Uber!

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Uber just settled its New Jersey UI audit on independent contractor assessment for $100,000,000, down from an original sum much greater.  Pretty good considering that misclassification is a heavy focus of the NJ Department of Labor; indeed, many Stop Work Order cases the Department initiates are based on a misclassification allegation by the agency.

The NJDOL had initially assessed Uber and its subsidiary Raiser LLC more than one-billion dollars in contributions to the UI Fund.  Uber vowed to fight and did so until this settlement presented itself.  An Uber representative stated that the Company was  “glad to put this issue behind us, pay the state about $100 million as our drivers remain independent contractors who can work where and when they want.”  There are almost 300,000 drivers involved.  Significantly, the Company did not seemingly agree that it would treat the drivers as employees in the future.

A lawyer with the pro-worker National Employment Law Project stated that “employer taxes are critical to a social insurance system that helps workers when they are unemployed, sick, or injured on the job.  This is yet another data point, along with court decisions, worker outcry, and shifting public opinion across the country, that gig employers like Uber should be accountable to their workers, and that app-based workers deserve the protection of state employment laws.”

There is some other fall out or consequences.  One commentator observes that the result will “will inspire other jurisdictions to follow suit.”  Another observed that this result “highlights the fact that the different tests really do drive different results.”  Although the federal government cannot mandate the adoption of the strict ABC test, a Congressional law could do just that.  The case also highlights how hard it is for someone to be accurately and “legally” classified as an independent contractor.”

The Takeaway

This shows that the New Jersey DOL is going to be, as it has for the last few years, very aggressive on misclassification, notwithstanding what Company is involved.  I think the shame of it is that many, many of these people want to be independent contractors and do not want all the entanglements that come with employee status.  But the DOL simply does not care about the wishes of the drivers themselves.

With that said, there is a light at the end of the tunnel.  Two years ago, the State of California adopted a ballot measure (Prop 22) that carved out app-based companies from an application of the ABC test.  Maybe there is a nascent recognition that workers in these industries are different than other employees and the old tests, i.e. ABC, do not apply to these types of workers.

Maybe…

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