Uber owes New Jersey about $650 million in taxes, state says

New Jersey says that the ride-hailing company Uber owes the state approximately $650 million in unemployment and disability insurance taxes because the company has misidentified its employees as independent contractors.

The New Jersey Department of Labor and Workforce Development found Uber and its subsidiary Raiser LLC owed $523 million in taxes over the last four years, according to a letter from the department to the companies obtained by Bloomberg Law. They need to pay an additional $119 million in interest and penalties for the lack of payment, according to internal documents.

{mosads}New Jersey also told Uber it got a court judgment requesting the company pay about $54 million in unpaid unemployment and disability insurance taxes, but it is not known if Uber ever paid up.  

The state’s labor department has attempted to get Uber to pay these employment taxes for at least four years, according to the documents obtained by Bloomberg Law. The fight has focused on unemployment and disability insurance taxes but could lead to a requirement for Uber to pay drivers minimum wage and overtime. 

Uber drivers are currently considered self-employed entrepreneurs rather than employees, which means they don’t get some benefits. 

Ride-hailing companies are facing movements in California and New York to mandate drivers to be characterized as employees. Uber and competitor Lyft committed $30 million to stop a California law that requires the reclassification. New York politicians are planning to move forward with similar legislation next year, Bloomberg Law reported.

Labor Commissioner Robert Asaro-Angelo said in a statement obtained by Bloomberg Law that “cracking down on employee misclassification” is a “priority” for the governor’s administration.

“For those who say properly enforcing our unemployment laws will stifle worker flexibility, let’s be clear: there is no reason temporary, or on-demand workers can’t be treated like other employees who work flexible hours for short durations,” Asaro-Angelo said.

An Uber spokesperson said in a statement to The Hill that they plan to fight the labor department’s decision

“We are challenging this preliminary but incorrect determination, because drivers are independent contractors in New Jersey and elsewhere,” the statement reads.

Figures provided by the spokesperson indicate that New Jersey’s estimated unemployment insurance tax payments exceed how active Uber is in the state. The current estimates assume total gross bookings in New Jersey reach $18 billion.

The federal Labor Department and the National Labor Relations Board (NLRB) have indicated they do not plan to move forward with allegations that such drivers are mischaracterized, with the NLRB’s top lawyer calling the drivers independent contractors, according to Bloomberg Law.

The Hill has reached out to the New Jersey Department of Labor and Workforce Development for comment.

Updated at 12:20 p.m.