New Jersey Department of Labor and Workforce Development Refers $16 Million Worker Misclassification Case Against Lyft to Office of Administrative Law

New Jersey Department of Labor and Workforce Development Passes $16 Million Worker misclassification case against Lyft in Administrative Law Office

TRENTON – The New Jersey Department of Labor and Workforce Development (NJDOL) has taken its worker misclassification case against Lyft to court, asking an administrative law judge to uphold the department’s assessment that the ride-hailing company owes $16 million in unemployment, temporary disability and family leave dues and penalties, as revealed in a four-year departmental audit.

The NJDOL assessment determined that the company incorrectly classified the drivers as independent contractors rather than employees and therefore failed to pay employer contributions for unemployment, temporary disability , family leave insurance and other benefits.

Lyft disputes the rating.

Transferring the case to the state’s Office of Administrative Law, NJDOL is asking a judge to confirm that Lyft owes employer contributions, plus penalties and interest, for the 2014 through 2017 tax years. are independent contractors, as Lyft contends, the company would not be liable for any unpaid dues.

“Misclassification laws exist not only to protect workers from exploitation, but also for the vast majority of employers who pay the unemployment and disability contributions they owe and should not be economically disadvantaged by those who flout the law,” said Deputy Commissioner of Income Securities Ron Marino.

“If the COVID-19 pandemic has taught us anything,” he continued, “it’s the importance of having a financial safety net, and through their actions, Lyft has deprived the rights and protections fundamentals of the people they rely on the most.”

Lyft’s audit was triggered by drivers who filed for unemployment insurance even though neither they nor their employer had contributed to the Unemployment Trust Fund, which pays those benefits. Employers are required to contribute to the fund – unless their workers are independent contractors.

Generally, under New Jersey law, workers are presumed to be employees and not independent contractors, unless the employer can meet all three parts of the ABC test. In order to meet the test, a business must be able to demonstrate that it does not control the work, that the service provided is outside the normal course of business or usual place of business, and that the worker is engaged in a trade , occupation, profession or independent business that could operate separately and independently from society.

Misclassified workers do not enjoy the same protections as employees. They can be deprived of minimum wage, earned sick days, overtime, temporary disability, health and safety protections, and more.

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Michael A. Bynum