New Jersey Strengthens Independent Contractor Rights, Lyft Pays $19.4M for Misclassification
New Jersey has taken significant steps to protect independent contractors' rights. Earlier this year, the NJDOL proposed rules to strengthen these protections, including the implementation of the 'ABC test'. This move follows a review of Lyft, which resulted in the ride-hailing giant paying over $19 million for misclassifying more than 100,000 drivers in breaking news.
The review was led by Robert Asaro-Angelo, the New Jersey Labor Commissioner. It found that Lyft had denied its drivers employee rights such as minimum wage, overtime pay, and unemployment insurance by misclassifying them as independent contractors. New Jersey law presumes a worker is an employee unless they pass the 'ABC test', which Lyft initially contested but later withdrew its challenge and settled the case.
The settlement, totaling $19.4 million, includes over $10.8 million in past due contributions to state funds for unemployment, disability, and workforce development, along with penalties and interest of over $8.5 million. Lyft's competitor, Uber, faced a similar issue in 2022, paying New Jersey $100 million for driver misclassification. Opponents of the proposed rules argue they would reduce independent contractors' freedoms and increase labor costs for businesses. However, Labor Commissioner Asaro-Angelo maintains that temporary or on-demand workers can still be treated like other employees, and misclassification harms both employers and workers.
Lyft's settlement with New Jersey highlights the state's commitment to protecting workers' rights. The proposed rules, if implemented, could further strengthen these protections, ensuring that independent contractors are not denied the benefits and rights they deserve in news.
