New Jersey says Uber owes $650 million in back taxes and interest for misclassifying workers as independent contractors. This isn’t coming out of nowhere—in 2015, the state notified Uber it owed $54 million in unemployment and disability taxes. Four years later, the number has grown to $523 million in past-due taxes and $119 million in interest and penalties.
No surprise, Uber says it will fight to avoid paying its tab. And the decision that Uber drivers are employees could have major ramifications beyond taxes—refusing to treat its workers as employees is at the heart of Uber’s business model. New Jersey is dealing other blows against that misclassification, including determining former rideshare drivers to have been employees for the purposes of collecting unemployment (one of the taxes Uber hasn’t been paying), and the state Senate is considering legislation cracking down on misclassification. California recently passed such a law, which Uber and other affected companies have said they will spend tens of millions of dollars fighting. A class-action lawsuit against Uber in New Jersey also seeks to escape Uber’s forced arbitration requirement because the drivers in question are involved in interstate commerce.
Uber’s business model is reliant on violating labor law to exploit workers, and, as the New Jersey case shows, it also cheats states of massive amounts of revenue. Increasingly, that model is under challenge in the states. Following the New Jersey demand for back taxes, the New York Taxi Workers Alliance’s Bhairavi Desai said in a statement, “New Jersey is sending a message that the state’s labor laws aren’t dictated by corporations. It’s time for New York to follow.” It is time, and that would be another major challenge for Uber. At some point, you have to wonder how many big states even a rich company like Uber can afford to keep battling for the right to violate labor laws.
This article was originally published at Daily Kos on November 16, 2019. Reprinted with permission.