[co-author: Stephanie Kozol]*
On September 18, 2025, the New Jersey Department of Labor and Workforce Development (NJDOL) and the Office of the New Jersey Attorney General (AG) announced that Lyft had paid $19,435,087.06 for allegedly misclassifying its employees as independent contractors.
Lyft was audited when drivers began filing for unemployment insurance and disability benefits. The audit, conducted by the NJDOL, reviewed records from Lyft dating from 2014 to 2017. The NJDOL found that Lyft had allegedly failed to contribute $10.8 million in payments throughout this four-year period, and based on this claim, the NJDOL assessed $8.5 million in penalties and interest. Although Lyft challenged the NJDOL’s assessment, it paid the $10.8 million in past-due contributions to halt the accrual of interest, and it later withdrew its request for a hearing and paid the $8.5 million in penalties and interest.
The AG denounced this alleged behavior because employees misclassified as independent contractors are not provided the benefits they are entitled to, such as minimum wage, sick leave, and unemployment insurance.
Why It Matters
The resolution of this matter is important, as regulators will seek enforcement against companies allegedly misclassifying employees as independent contractors. Companies should be aware that regulatory bodies like the NJDOL are actively auditing and enforcing compliance with labor laws. Given the risk of substantial financial penalties and back payments associated with alleged non-compliance, it is important to review these classifications. These issues are particularly important for companies in the gig economy. Overall, this matter is a cautionary tale for companies to carefully assess their worker classification practices and ensure compliance with applicable labor laws to avoid similar potential legal and financial consequences.
*Senior Government Relations Manager
