Lyft has paid $19.4 million to settle a dispute with the state Department of Labor & Workforce Development, which alleged the ride-sharing company had misclassified more than 100,000 drivers as independent contractors between 2014 and 2017.
The payment includes $10.8 million for unemployment, family leave, and disability taxes that state labor officials claim the company should have paid for drivers during that period, plus $8.5 million in penalties and interest.
"We continue to believe drivers are properly classified as independent contractors under New Jersey law, something drivers on Lyft say they overwhelmingly support as it provides them the freedom and flexibility they value most,” said Lyft spokesman C.J. Macklin on Friday.
“While we disagree with the NJDOL's findings, we will not be pursuing further challenges to the assessment," Macklin said.
Lyft had initially contested the NJDOL’s determination on the drivers’ status and the case was transferred to the New Jersey Office of Administrative Law. In August, the company decided to settle the case rather than continue an expensive legal fight. DOL Commissioner Robert Asaro-Angelo and Attorney General Matt Platkin announced the settlement late Thursday.
In 2022, Uber agreed to pay New Jersey $100 million in back taxes over the state’s claim that the company misclassified nearly 300,000 of its drivers as independent contractors between 2014-2018. Uber also disputed the state’s view that its drivers are “employees,” and maintains they are independent contractors able to choose when and where they work.
The case against Uber was resolved for a significantly lower amount than the $642 million the state had originally sought. In the end, Uber and a subsidiary agreed to end the dispute by paying $78 million in past-due contributions plus penalties and interest of $22 million.
