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New Jersey investigating possible worker misclassification

Regular readers of our Morristown employment law blog know that New Jersey’s recent expansion of its wage and hour laws has made it easier for both regulators and workers to level a wide variety of charges against employers. We read recently that state labor auditors are investigating whether ride-sharing companies Uber and Lyft are misclassifying workers as independent contractors.

If the Department of Labor and Workforce Development determines that drivers are actually employees and not independent contractors, the companies would face a raft of possible sanctions and changes to pay, hours and more.

If Uber and Lyft are found to have been misclassifying drivers, they could be required to pay for drivers’ unemployment insurance and be forced to pay the drivers minimum wage and overtime. The rideshare giants would also be required to provide temporary disability insurance.

As things stand now with the drivers classified by Uber and Lyft as independent contractors, the drivers are not protected by laws in a variety of areas, including:

  • Minimum wage
  • Overtime
  • Workers’ compensation
  • Unemployment insurance

Independent contractors are also responsible for paying both employer and employee shares of taxes for Social Security, Medicare and more.

Bloomberg estimates that company costs per driver could leap by more than 20 percent if the drivers are reclassified as employees. Employee-drivers might well also have the ability to unionize, a news report stated.

It should be noted that a federal appeals court last year blocked Seattle from implementing an ordinance that would have enabled drivers to form or join unions.

New Jersey Gov. Phil Murphy recently told union members that the state would crack down on misclassifications, claiming that businesses avoided paying more than $460 million in wages by misclassifying workers.

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