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.
For the third consecutive year, McDonald’s Corporation must respond to allegations of widespread sexual harassment of female workers by male managers and coworkers. Protests concerning low wages began over seven years ago, but the workers have now added sexual harassment and discrimination to their list of workplace grievances. Last week, sexual harassment complaints were filed by 25 workers with assistance from the labor group Fight for $15, and the sexual harassment attorneys of the Time’s Up Legal Defense Fund. The claims allege a broad range of incidents including groping, lewd comments, and retaliation by management.
More Than 50 Harassment Complaints Over Three Year Period
Over the past three years, McDonald’s has had more than 50 complaints about various types of harassment in the workplace. Sexual Harassment attorney, Eve Cervantes, who is representing one of the women, stated that some of the alleged victims were as young as sixteen. Three of the complaints were filed as civil rights lawsuits.
The complaints of sexual harassment and gender-based discrimination specifically included requests for sex, indecent exposure, inappropriate touching, and retaliation for reporting such conduct. In one complaint, Jamelia Fairley, a Florida employee alleged that for several months she was sexually harassed at the McDonald’s where she was employed. Her allegations included hearing lewd comments made about her daughter, who was only a year old at the time. Fairley alleges that her hours were reduced after the harassment was reported.
Another worker, Kimberly Lawson, expressed a desire to see McDonald’s recognize a union, which would assist employees to address issues such as sexual harassment, workplace violence, and low pay. Lawson filed a complaint last year with the Equal Employment Opportunity Commission–EEOC–alleging that she was groped by a coworker, but that her manager began to sexually harass her as well, after ignoring her complaint.
A McDonald’s spokeswoman declined to comment on Lawson’s filings with the EEOC; however, Steve Easterbrook, the company’s CEO, stated that McDonald’s is dedicated to ensuring that workers can enjoy a harassment-free and bias-free workplace.
High Profile Activists Join the Fight
Actress Padma Lakshmi and other high-profile activists joined an employee protest in Chicago. In addition, an open letter was sent to Easterbrook from Time’s Up concerning sexual misconduct and harassment in the McDonald’s workplace. The company will be faced with activist pressure from within and without at its upcoming shareholders meeting, and tensions are rising. Fight for $15, a higher wages advocacy group, is pinning its actions to the event, although the group cannot be present during the meeting, which is an investors-only gathering. In some cities where rallies were held about the company’s handling of harassment complaints, protesters were joined by Democratic presidential hopefuls.
The incidents are alleged to have taken place at franchise and corporate stores in 20 cities, with some workers contacting sexual harassment attorneys to handle their suits. The company promised more action in the future to ensure a safe, harassment-free workplace in all its locations.
Earlier this year, California Governor Jerry Brown signed a bill into law which will increase California’s minimum wage to $15.00 per hour by 2022. While the increase in minimum wage will obviously impact hourly, non-exempt employees, it will have a significant effect on the compensation and earnings of exempt employees as well.
For example, for an employee to be properly classified as exempt from overtime, the employee must satisfy the requirements of an established exemption (such as an executive or professional). Most exemptions require both the performance of certain duties and responsibilities and the payment of a minimum salary. In California, to qualify for the administrative, executive, or professional exemption, an employee must be paid no less than twice the State minimum wage. Today, this equates to an annual salary of $41,600.00. By 2022, that will rise to $62,400.00.Therefore, California’s increased minimum wage has a profound effect on all employees, not just those classified as non-exempt.
California law does not allow anyone to simply be classified as exempt without the payment of overtime. As an employment law attorney in Orange County I can tell you firsthand, misclassification of exempt employees is a common mistake among California employers, especially based on an employee’s duties. If it is determined an employee is misclassified as exempt, the employer must then compensate the employee for overtime hours(over 8 in a workday and over 40 in a worker) at a rate of time and a half their hourly rate of pay. Depending on the circumstances, an employer may then also be liable for the payment of meal and rest period premiums for such violations, and penalties for failure to timely pay wages and inaccurate itemized wage statements.
If you have a questions regarding your classification as an exempt employee, and whether you meet either the salary or duties test to be exempt from overtime compensation, please contact the employment law attorneys at Ares Law Group who have substantial experience dealing with this and all types of employment issues.