2019 hasn’t been that great for Uber (remember that disastrous IPO), and it seems that the last two months of the year won’t be any better for the ride-hailing company.
New Jersey is the latest thorn at Uber’s side with the state seeking over $640 million in taxes and other penalties from the company for misclassifying its drivers.
As you may very well know, Uber, Lyft, and other gig economy companies rely on contract labor. As such, they classify their drivers as contractors and not employees, a stand that has been the cause of uproar all over the place.
Worker advocates have time and again argued that this classification hurts the workers by making them miss out on certain benefits, and the states in which these workers are from have complained that they miss out on revenue that they’d get were these contractors classified as employees.
New Jersey has taken it a notch higher by taking the fight right to Uber’s door. The state’s labor department has the company on the hook for $523 million in unpaid taxes, which also comes with a hefty $119 fine for late remittance.
Apparently, the department has been sending letters to the company referencing this matter, but Uber is yet to do anything about it. Thanks to Bloomberg Law, some of these letters were made public, and we all know how the court of public opinion passes judgment, don’t we?
As expected, the company challenged the state, releasing a statement to that effect. They stood firm with their classification of drivers as contractors, saying that this would remain the case in New Jersey and in all other states in the country.
Naturally, all those who are for contractor reclassification hail the move by the state as a victory for the drivers. Were they to be termed employees, this would automatically translate to better working conditions, especially for those who solely rely on the company for their livelihood.
Shammon Liss-Riordan, a name partner at the law firm Lichten & Liss-Riordan has represented countless of drivers in a number of classification cases. She says that some of her clients are homeless, using their cars as their home. You’d think that with Uber’s popularity the drivers would be earning good money, but appearances can be deceiving.
For Liss-Riordan, the reclassification of these drivers to employee status would count as a big win. The deplorable state in which they live, she says, should never be acceptable.
Is it all about the unpaid taxes, you ask? The state’s labor commissioner, Robert Asaro-Angelo, says that it is not. In fact, it is about protecting honest businessmen. You do know that contractors get their disability or unemployment benefits from taxpayer money, don’t you?
That Uber doesn’t pay taxes where these contractors are involved places others who do remit the taxes at a disadvantage. They pay for these benefits, but these contractors never worked for them in the first place. According to Asaro-Angelo, Uber is acting with impunity and defying the law.
Whenever the woes at Uber make headlines, you never fail to think of Lyft, right? When asked whether the state was going after Lyft for unpaid taxes as well, the labor department declined to comment.