New Jersey said Lyft drivers aren’t independent contractors. Now the company is paying $19.4 million
Lyft had initially challenged a New Jersey audit’s findings, but dropped the challenge and paid an additional $8.5 million just before a hearing was set to begin.
Lyft has paid $19.4 million to New Jersey’s Department of Labor & Workforce Development after the state found that the company had misclassified over 100,000 drivers as independent contractors.
New Jersey officials were made aware of the misclassification after Lyft workers tried to apply for unemployment and disability benefits. Lyft had not been making payments toward New Jersey’s funds between 2014 and 2017, a state audit found.
“We will not allow businesses to exploit workers by misclassifying them, stripping employees of essential benefits and avoiding their responsibility to support programs that protect our workforce,” said New Jersey Attorney General Matthew J. Platkin in a statement Thursday.
The case in New Jersey is just the latest legal battle rideshare companies have faced over the classification of their drivers as independent contractors.
In 2022, Uber paid $100 million in New Jersey over the misclassification of hundreds of thousands of drivers — the largest payment of its kind ever made in the state, the New Jersey Department of Labor and Workforce Development said at the time.
But companies that depend on gig work have also pushed for the independent contractor model to stay. California’s Supreme Court sided with Uber and Lyft in a case last year that allows them to continue classifying workers as independent contractors in the state.
A statement from Lyft on Friday notes that while the company disagrees with the findings in New Jersey, it will “not be pursuing further challenges to the assessment.”
“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,” reads the company statement.
New Jersey Labor Commissioner Robert Asaro-Angelo said in a statement Thursday that workers who are incorrectly classified as independent contractors don’t have access to benefits and protections including minimum wage, overtime pay, workers’ compensation coverage, unemployment insurance, earned sick leave, and family leave.
“Although many allege that being an employee stifles flexibility, this couldn’t be further from the truth,” Asaro-Angelo said. ”There is no reason temporary or on-demand workers who work flexible hours, or even minutes at a time, can’t be treated like other employees.”
In 2022, Lyft challenged the findings of the investigation. Last month, days before a hearing was scheduled to begin, Lyft removed its petition for a hearing and paid the more than $8.5 million owed to the state, which was in addition to the more than $10.8 million it had initially paid to avoid interest.
The payments were made toward state funds for unemployment, temporary disability, family leave insurance, and workforce development. Those funds are used to pay worker benefits as well as related administrative costs.
Lyft, which was founded in 2012, has a presence in nearly 1,000 cities. The company reports that in 2024 over a million drivers made nearly $9 billion collectively on the platform before tips.