New Jersey is the latest state to say Uber’s drivers should be classified as employees rather than independent contractors.
According to the Bloomberg Law report, the state’s labor department said that because of this misclassification, the ride-hailing company owes it roughly $650 million in unemployment taxes and disability insurance.
According to documents obtained by Bloomberg Law, the labor department reportedly has been trying to get unpaid employment taxes from Uber going back as far as 2015. It said the company owed the state $523 million in overdue taxes along with another $119 million in interest and penalties for the last four years.
An Uber spokesman mentioned in an email that “We are challenging this preliminary but incorrect determination. Because drivers are independent contractors in New Jersey and elsewhere.”
Over the past year, driver classification is an issue that government regulators have been taking a closer look at.
In September, California passed a law that could require Uber and other on-demand companies to reclassify their drivers as employees instead of independent contractors. The law is set to go into effect Jan. 1. New York, Washington and Oregon state have considered similar legislation.
Lyft, Uber and several other tech companies have vowed to fight the California law, concertedly putting more than $90 million behind a ballot initiative that will take the issue to voters next November.
Lyft’s and Uber’s business models rely on bringing aboard hundreds of thousands of independent contractors. That’s because Lyft and Uber drivers supply and preserve their own cars and also pay for their own health care and benefits, such as sick days or overtime pay.