Lyft shells out $19.4 million to settle driver misclassification issues in New Jersey
Lyft Settles $19.4M 'Breaking News' Over Misclassified 'NJ' Drivers; 'NYT' Reports
In a significant move, ride-hailing giant Lyft has paid $19.4 million to the state of New Jersey over misclassifying over 100,000 drivers as independent contractors. The payment, made after Lyft withdrew its request for a hearing to challenge an audit by New Jersey's Department of Labor and Workforce Development (NJDOL), also includes more than $10.8 million in past-due contributions, plus over $8.5 million in penalties and interest.
The audit, which covered the years 2014 to 2017, found that Lyft had not made contributions to state funds during this period, thereby depriving drivers of protections such as unemployment compensation, temporary disability benefits, and family leave. The funds are intended to provide support for workers in times of need, and their absence has been a point of contention for many in the gig economy.
New Jersey Labor Commissioner Robert Asaro-Angelo emphasized that temporary or on-demand workers, even those working flexible hours or minutes at a time, can be treated like other employees. This stance aligns with regulations that have been imposed on other companies in the gig economy, including Lyft's main competitor, Uber.
Lyft, however, maintains that it classified drivers properly under New Jersey law. The company argues that drivers prefer the flexibility of working on their own terms rather than as employees, a sentiment that has been echoed by many in the gig economy.
Regulators, on the other hand, have stated that the alleged misclassification of drivers by companies like Lyft and Uber denies them benefits such as a minimum wage, overtime pay, and sick leave. These benefits are standard for traditional employees and are seen as essential for ensuring fair treatment and decent working conditions.
It's worth noting that Lyft reached a similar $27 million settlement with Massachusetts in June 2024, further underscoring the company's efforts to address these issues. The company paid $10.8 million to stop interest from running, and the remaining amount after ending its challenge.
With this settlement, Lyft will not be pursuing further challenges to the assessment made by the NJDOL. The move marks a significant step towards resolving these long-standing issues and could set a precedent for other companies in the gig economy.
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