The state of New Jersey is suing Uber Technologies inc. approximately $650 million in insurance and unemployment taxes after allegedly misidentifying its drivers as independent contractors rather than employees, according to a report.
Uber, one of the biggest ride-sharing company in the world owes $523 million in overdue disability insurance and unemployment taxes that were not paid over the course of the past four years. Uber also allegedly owes up to $119 million in accumulated fines and interest. “We are challenging this preliminary but incorrect determination because drivers are independent contractors in New Jersey and elsewhere.’’ Said Uber spokesman Alix Anfang in FOX Business. New Jersey Labor Commissioner Robert Asaro-Angelo called “cracking down on employee misclassification” a “priority.” The Labor Department however, did not immediately respond to FOX Business’ request for comment on Contractors in New Jersey and elsewhere,” Uber spokeswoman Alix Anfang told FOX Business.
Of recent, Uber has been under serious scrutiny. Chicago Mayor Lori Lightfoot on Wednesday accused Uber of bribing black ministers. The ride sharing company also faced criticism on Twitter after CEO Dara Khosrowshahi called Jamal Khashoggi’s murder a “mistake.”
Furthermore, Uber is owing $523 million in overdue disability insurance and unemployment taxes that were not paid over the course of the past four years, Bloomberg Law reported, citing the state’s Department of Labor and Workforce Development. Uber also owes up to $119 million in accrued penalties and interest allegedly.
The State of New Jersey is hoping to receive almost $650 million in back taxes and penalties from Uber Technologies, making it the latest façade in a nationwide battle over whether drivers who work for ridesharing companies are considered employees or independent contractors.
Never the less, Uber is not ready to accept New Jersey’s interpretation of how its drivers should be classified. “We are challenging this preliminary but incorrect determination, because drivers are independent contractors in New Jersey and elsewhere,” an Uber spokesperson also told CBS MoneyWatch.
Uber’s business model largely depends on drivers being treated as self-employed contractors rather than employees who are entitled to health care and other benefits, a legal classification that saves the company on labor costs. Its stock price fell nearly 3% on Thursday after news surfaced of the back-taxes tab.
It is worth noting that New Jersey is not the only party concern when it comes to classifying employees. Uber and competitor Lyft have each pledged $30 million to fight recent legislation passed in California that could require them to count drivers as employees.