Uber Technologies Inc. is indebted to the State of New Jersey for approximately $650 million for disability and unemployment insurance taxes. The New Jersey Department of Labor and Workforce Development said that the money owed is based on Uber’s misclassification of employees as independent contractors.
Uber, along with its subsidiary, Rasier LLC, was given a past-due tax assessment of $523 million, which covers taxes from 2015 to the present. According to additional documents, the rideshare companies may also be obligated to pay up to $119 million in penalties and interest on the four-year-long tax bill.
Uber Challenges State Labor Department
Uber spokesperson Alix Anfang told Bloomberg Law that this determination was incorrect and that the companies are planning to fight it because in New Jersey, and elsewhere, drivers are independent contractors.
At this point, New Jersey’s determination is limited to disability and unemployment insurance; however, it could also mean that eventually rideshare drivers would have to be paid at the state’s minimum wage rate and receive applicable overtime pay. According to Bloomberg Intelligence, if companies such as Lyft and Uber are forced to recategorize their drivers as employees, the cost of rides could increase by over 20 percent.
Lobbying in New York and California
These controversies mark the most recent attacks on the business model for rideshare companies, virtually all of which treat drivers as independent contractors, not employees. When working as self-employed contractors, individuals do not qualify for certain benefits, such as the aforementioned disability and unemployment insurance. Lyft and Uber have now pledged $30 million apiece to challenge new legislation in California that is expected to force such companies to recognize drivers as employees. Additionally, lawmakers in New York are preparing for a similar battle after the New Year.
California has effectively legislated to force Uber and Lyft to classify drivers as employees rather than independent contractors. This will undoubtedly be a hotly contested issue in the California Court system until, more likely than not, the California Supreme Court has the final say.
Audit Launched Among Uber Drivers
The New Jersey Labor Department dispatched surveys to drivers working for Uber and Lyft over the past year, requesting information concerning their tax status and classification. Each year, the Labor Department audits approximately one percent of employers to screen for possible misclassification of workers.
As of Oct. 23, 2019, the State of New Jersey has discovered that 65 drivers who declared Lyft, Uber, or Rasier as their employer on claim forms are actually company employees, and therefore eligible to apply for various unemployment benefits.
No Action Planned at the Federal Level
The National Labor Relations Board and Federal Labor Department recently stated they are unlikely to pursue the rideshare companies for alleged misclassification. The decision was based on their opinion that contractors at an unnamed “virtual marketplace” are not employees because the business simply acts as a referral to link entrepreneurs with various opportunities. The Federal Labor Department said that this means Uber drivers are therefore independent contractors, thus excluding them from unemployment insurance, union benefits, and disability insurance.
However, the State of New Jersey requires a business to demonstrate that it does not control the work completed by the independent contractor and that the services provided are outside the scope of the company’s “usual course” of business. Otherwise, the drivers are considered employees by the state.
According to Bloomberg Law, certain New Jersey drivers said they prefer the flexibility of remaining independent contractors, as this means they can choose where and when to work. Worker advocates, on the other hand, are holding fast to their position that rideshare company owners are skirting their basic responsibilities by classifying such drivers as independent contractors rather than employees.
Uber fell to $25.99 per share, a decline of 2.7 percent, once the news of the disputed tax bill became public. Lyft’s shares fell 3.2 percent around the same time. As of December 2019, it is unclear whether a hearing has been scheduled, and it is also not known if Uber has paid any part of the tax bill that the State of New Jersey is demanding.
If you think you are being misclassified as an employee or independent contractor, call one of our employment attorneys in Orange County at Ares Law Group. Our number is 949-629-2519 and we would be happy to give you a free consultation regarding your situation.
The State of California just enacted a bill confirming that most workers are employees rather than independent contractors and affirming the relevant legal analysis implemented by California Courts. Although the law is applicable to all employers in the State of California, it has a particularly strong effect on Lyft, Uber and numerous “gig” companies that will require them to acknowledge many of their workers as employees, rather than independent contractors. Our employment attorneys in Orange County believe similar laws may pass in other states as well, as California is often the leader with regard to employment regulation.
In California, the law confirms what California Courts have found that, in general, a person would only be considered an independent contractor if the tasks he or she performs fall outside the parameters of the company’s usual course of business. In addition, workers are not regarded as independent contractors if the business exerts meaningful control over how their job duties are performed or if the work they do is part of the company’s regular business.
Lorena Gonzalez, the Democrat Assemblywoman who authored the bill, stated that it was developed as a way to prohibit businesses from miscategorizing workers and ultimately gaming the system. Naturally, it would have been difficult to predict the ways in which the employment landscape would change when these companies were created, but the aim of California lawmakers is to prevent businesses from passing costs onto workers and taxpayers.
Uber Attorney Announces That Drivers are to Maintain Contractor Status
Uber’s top attorney announced on September 11, 2019, that in spite of the new regulations, the company has no plans to treat drivers as employees. Uber’s Chief Legal Officer, Tony West, promised that drivers will maintain independent contractor status.
West stated that Uber’s business does not merely provide rides, but serves as a technology platform for numerous kinds of digital marketplaces, and that they are somewhat used to legal battles.
As our Orange County employment attorneys know from handling these cases, as well as observing the local legal environment, litigation is almost certain to continue if companies continue to attempt to find justifications to classify regular works as independent contractors.
When the costs and complexities of having employees versus hiring independent contractors are considered, it is not difficult to see why some businesses do everything they can to maintain contractors.
One case in point is a long-running dispute that was settled for $228 million in 2015, between FedEx and their Ground California drivers. FedEx Ground robustly defended its purported independent contractor model, but the Ninth Circuit determined that over 2,250 drivers were actually covered by California’s employee protection statutes. Our employment attorneys in Orange County will continue to follow the story and watch for any new developments.
According to a lawsuit filed by Concetta Graziosi in Brooklyn Federal Court, Latin music superstar, Marc Anthony, failed to pay his long-term housekeeper approximately $500,000.00 in unpaid wages. The former housekeeper was responsible for various duties, including cleaning the 10,000 square foot Long Island mansion in which Mr. Anthony resided in with his then-wife, Jennifer Lopez, and their children.
Housekeeper Alleges Thousands in Unpaid Wages
Ms. Graziosi began working for the music star in 2005 and remained employed until 2017, when the Brookville home was sold. Ms. Graziosi alleged that Mr. Anthony forced her to work as many as 80 hours each week, but never paid her the required overtime wages. According to Court papers, Ms. Graziosi stated that at times she was not even paid minimum wage, but rather was given $2,000.00 every other week, regardless of the number of work hours she logged. The lawsuit also alleged that Ms. Graziosi sometimes had to work seven days a week and at times, was not paid at all. In addition, she stated that she never received paid vacation time.
Mr. Anthony also allegedly deducted a processing fee from Ms. Graziosi’s paychecks, which she received via direct deposit. In addition, the lawsuit alleges that Ms. Graziosi sometimes bought groceries for the household on her way to work, but was not given compensation. Jonathan Bell, Ms. Graziosi’s employment law attorney, stated that she was terminated just prior to the Brookville home being sold in 2017 for $4.5 million, and that his client was clearly taken advantage of.
Lawsuit Settled for $500,000
After months of negotiations between the employment attorneys, a deal was finally reached. Mr. Anthony agreed to pay his ex-housekeeper approximately $500,000.00. The lawsuit was settled in private mediation, but the singer has not yet commented about the matter. Mr. Anthony and Ms. Lopez divorced in 2014, and Ms. Lopez was not named in the suit. Representatives for the singer did not immediately return requests for comment.
An Oregon-based trucking company has agreed to settle with a group of California truck drivers for over $1.5 million as a result of a class-action wage lawsuit. Our employment attorneys in Orange County have learned that the lawsuit against Reddaway Trucking was filed by more than 1,000 commercial drivers and the company–owned by YRC Worldwide–agreed to the settlement on April 12, 2019.
If the courts approve, an average payout of $726.40–with a maximum of $1,742.40–will be awarded to each driver. An incentive award of $20,000 may also be given to each named plaintiff, and attorneys may collect up to 33 percent of the settlement, which is roughly $500,000.
Saul Montes and Mario Barrios filed the lawsuit in November, 2017, on behalf of themselves and 1,170 other individuals who drove for Reddaway. The suit was filed in the Central District of California. The lawsuit alleged that California’s state wage and hour laws were violated when drivers were not paid in a timely manner and expenses were not reimbursed. It also claimed that drivers were forced to skip meal breaks and that their itemized wage statements were not provided by the company.
If an employee works more than five hours, he or she must be given the opportunity to take a 30 minute, uninterrupted meal break according to California Labor Code Section 512, and those who work longer than ten hours must be given the option of a second meal break.
In some cases, an “on duty” meal break is permitted if the employee’s work duties are such that prevent him or her from being entirely relieved of job related tasks for that period of time. However, written consent must be obtained from the employee, and drivers involved in the lawsuit claimed that they never gave Reddaway such consent. The law allows the drivers to recover one hour of pay for all days during which a meal break was denied. Similar California laws and compensation guidelines also apply to rest breaks.
Additionally, the lawsuit alleges that Reddaway did not reimburse employees for the company-mandated, work related use of their personal cell phones. Drivers also claim that the company did not keep appropriate, itemized time records showing when they started and ended each shift, including split shift intervals, meal periods, and total daily hours worked. Reddaway is also accused of reporting total hours inaccurately and failing to show all reimbursements and deductions. California law states that each driver may be awarded up to $4,000 for the violations involving record-keeping.
Finally, some drivers who quit or had their employment terminated by the company claim they either received due wages late or not at all. According to state law, any compensation due must be paid immediately to employees who are terminated. Those who voluntarily sever their employment must receive due wages within 72 hours of their last day worked. If a 72 hour or greater advance notice is given to the company that the employee is leaving, the company must pay all wages due on that person’s last day of work.
If you believe that your employer has forced you to skip meal and rest breaks, or has failed to pay you due wages, we urge you to contact our employment law attorneys in Orange County. We often hear from employees who weren’t aware that their rights were being violated for several months – or even years. Our employment attorneys specialize in helping people recover the wages they earned, but never received. Call us today to discuss your case. (949) 629-2519
Our employment attorneys in Orange County recently learned about a lawsuit that was filed against pop-icon Mariah Carey, by her former executive assistant, Lianna Shakhnazaryan. In the suit, Ms. Shakhnazaryan claimed that Ms. Carey—along with her one time manager, Stella Bulochnikov—sexually harassed her and wrongfully terminated her employment. The allegations made in the lengthy lawsuit against Ms. Carey included wrongful termination, sexual harassment, and failure to prevent harassment or discrimination in the workplace. Ms. Shakhnazaryan also claimed that she was owed wages upon her termination, including overtime pay she never received.
According to Ms. Shakhnazaryan, in September 2015 she began working as Ms. Carey’s assistant and claimed she had a verbal agreement that included an annual salary of $328,500.00, although no formal paperwork was drawn up through an employment attorney or other third-party. The former employee also alleges that she was forced to meet continuous demands of considerable magnitude and frequently faced short deadlines for which proper compensation was not offered.
Ms. Shakhnazaryan also claims that she was subjected to sexual harassment and inappropriate conduct as well, and that Ms. Bulochnikov repeatedly made offensive sexual comments to her, including remarks about Ms. Shakhnazaryan’s physical appearance. The former assistant alleges that Ms. Carey was fully aware of the inappropriate conduct of her then manager, and that on more than one occasion Ms. Carey witnessed Ms. Bulochnikov’s emotional abuse and sexual harassment of Ms. Shakhnazaryan and did nothing to stop to the behavior. Ms. Shakhnazaryan went as far as to claim that Ms. Carey gave permission to Ms. Bulochnikov to act in this inappropriate and troubling manner toward Ms. Shakhnazaryan. In addition, she has stated that other individuals employed by Ms. Carey also witnessed the alleged sexual harassment and battery, but did nothing to prevent or stop future episodes. Among the laundry list of complaints in Ms. Shakhnazaryan’s lawsuit is a claim that she was terminated as retaliation for her allegations against Ms. Bulochnikov.
With respect to unpaid compensation, Ms. Shakhnazaryan’s claims include, but are not limited to compensatory damages, such as unpaid overtime, lost wages on future and past earnings, and money for mental pain and anguish. General damages were added to the suit as well, including punitive damages and attorney’s fees. She is also demanding a jury trial as opposed to an out-of-court settlement.
The inflammatory allegations made in her lawsuit came quickly on the heels of Ms. Carey’s own suit, in which Ms. Shakhnazaryan was accused of being “an extortionist, a grifter, and a Peeping Tom.” Mark Quigley, Ms. Shakhnazaryan’s lawyer, released a statement to Entertainment Tonight firmly denying the claims made in Carey’s lawsuit.
Carey settled a high-profile lawsuit with Ms. Bulochnikov earlier this month. Ms. Bulochnikov filed legal documents last April against Ms. Carey, after being terminated near the end of 2018. She accused the singer of breach of contract and sexual harassment, although those claims were strongly denied by Ms. Carey. According to court documents acquired by Entertainment Tonight, Ms. Carey and Ms. Bulochnikov settled the matter before the trial date was set.
Our Orange County employment attorneys specialize in cases regarding inappropriate sexual conduct in the workplace, unpaid wages and wrongful termination. If you have experienced any of these offenses, we urge you to contact our employment law attorneys today for a free consultation.