From JDSupra, Richard Reibstein predicts that other states will try to emulate New Jersey and attempt to collect unemployment taxes (or some portion of unemployment taxes due) from Uber. Richard writes:
Undoubtedly the most meaningful legal development in September 2022 was Uber’s agreement to pay $100 million in settlement to the New Jersey Department of Labor and Workforce Development for back unemployment taxes. As described below, Uber settled for a fraction of the amount it had been assessed, did not admit to liability, and did not agree to reclassify drivers providing services to its customers in New Jersey. Yet the amount of the settlement is so substantial that, as the publisher of this blog was quoted in an article about the settlement, “When a company pays a nine-figure amount dealing with the classification of their workers, other states … take note….
RIDE-SHARING COMPANY AGREES TO PAY $100 MILLION TO STATE AGENCY FOR UNEMPLOYMENT TAX PAYMENTS RELATED TO IC STATUS OF DRIVERS. Uber and a subsidiary have agreed to pay $100 million after an audit by the New Jersey Department of Labor and Workforce Development identified what the Department determined were violations due to the classification of hundreds of thousands of drivers as independent contractors. According to a news release from the NJDOL dated September13, 2022, the nearly 300,000 workers were deprived of “safety-net benefits,” such as unemployment insurance and temporary disability and family leave coverage. The release states that the $100 million assessment is “the largest such payment ever received in New Jersey.” Uber had initially been assessed more than $600 million; thus, its settlement is a small fraction of the amount it could have been ordered to pay if, after all appeals, the Department was successful. Further, under the settlement, which presumably includes a non-admission clause, Uber is not required to reclassify the drivers. The publisher of this blog commented on the settlement in a September 27, 2022 Law360 Employment Authority article by Max Kutner entitled, “State Tax Recoveries Don’t Help Worker Wage Issue,” noting: “[M]ore states could take similar action to seek back taxes. When a company pays a nine-figure amount dealing with the classification of their workers, other states … take note.”
