New Jersey, my beloved home state and perpetual butt of regional jokes, scored a major win for driversâ€”one that could also cost the slumping rideshare company as much as $US650 ($951) million in fines and unpaid taxes.
Considerable attention has been paid to Uberâ€™s contractor arrangements with its drivers, which deprive them of basic worker protections like minimum wage and overtime pay. Local laws, like Californiaâ€™s recently-passed AB5, and country-wide rulings like one earlier this week in Uruguay, have sought to correct for thisâ€”but states themselves are also disadvantaged by Uberâ€™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,Â owed at $US523 ($766) million, and it tacked on around $US119 ($174) million in additional penalties and interest.
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 Jerseyâ€™s Department of Labour made the determination that Uberâ€™s rideshare drivers are, in fact, employeesâ€”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 â€œa stinging rebuke of the architects of the gig economy.â€
New York drivers made similar inroads last summer, winning unemployment eligibility a year later.
Uberâ€™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 lawâ€™s implementation.
Weâ€™ve reached out to Uber for comment.
After the single worst IPO in history, Uberâ€™s share price has continued to fall, hovering at $US26.25 ($38) per share at the time of this writingâ€”nearly half of what it debuted at nine months ago.