New jersey punishes lyft for $19. 5 million over independent contractor driver status

Trenton, NJ – Lyft has agreed to pay nearly $19.5 million to New Jersey after state officials determined the ride-sharing company wrongly classified more than 100,000 drivers as independent contractors, depriving them of unemployment insurance, disability coverage, and other safety-net benefits.

The New Jersey Department of Labor and Workforce Development (NJDOL) and the Office of the Attorney General announced Thursday that the settlement follows a years-long audit covering 2014 through 2017. The review found Lyft failed to make mandatory contributions to state benefit funds, leading to a $10.8 million assessment in unpaid contributions and another $8.5 million in penalties and interest.

The case escalated when drivers filed for unemployment and disability benefits, exposing gaps in Lyft’s compliance. Lyft initially contested the findings, even paying a portion of the assessed contributions to stop interest from accruing, but ultimately dropped its legal challenge last month and paid the remaining $8.5 million.

“Misclassification imposes a financial toll on both good actor employers and misclassified workers, who lose critical rights such as minimum wage, overtime pay, workers’ compensation coverage, unemployment insurance, earned sick leave, family leave, and more,” said Labor Commissioner Robert Asaro-Angelo.

Attorney General Matthew J. Platkin added, “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.”

All recovered contributions will be returned to unemployment, disability, family leave, and workforce development trust funds. Officials said New Jersey’s strict enforcement has helped stabilize the state’s unemployment insurance trust fund, now exceeding $3 billion, and has lowered contribution rates for employers.

The case was resolved by attorneys in the Division of Law’s Labor Enforcement Section and NJDOL’s Employer Accounts team.

Key Points

Lyft paid $19.4 million to New Jersey after an audit found widespread driver misclassification between 2014 and 2017.
The settlement includes $10.8 million in unpaid contributions plus $8.5 million in penalties and interest.
State officials said the funds will strengthen unemployment and disability trust programs and protect workers’ rights.

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