Lyft will pay state $19.4M in dispute
Audit found 100,000 workers misclassified
By: Daniel Munoz
NorthJersey.com
USA Today Network - New Jersey
..... Lyft will pay New Jersey Labor Department more than $19.4 million to settle allegations from a state audit that found that the ride-sharing giant misclassified more than 100,000 workers as freelancers rather than regular employees, labor officials announced.
.....
The September 18 [2025] announcement came as state officials are exploring ways to overhaul the state's independent contractor rules so that more freelancers would be considered regular employees.
..... Under that proposal, truckers, as well as Uber and Lyft drives and DoorDash and GrubHub drivers, could be considered regular company employees rather than gig workers.
..... "Misclassification imposes a financial toll on both good actor employers and misclassified workers, who lost critical rights such as minimum wage, overtime pay, workers' compensation coverage, unemployment insurance, earned sick leave, family leave and more," New Jersey Labor Commissioner Robert Asaro-Angelo said September 18 [2025] in a statement.
..... The $19.4 million payment is broken down into $10.8 million for unemployment, family leave and disability taxes that Lyft allegedly skipped out on between 2014 and 2017, as well as $8.5 million in penalties and interest, labor officials said.
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"While we disagree with the [New Jersey Department of Labor]'s findings, we will not be pursuing further challenges to the assessment," Lyft spokesperson CJ Macklin said in an emailed statement Monday [0922/2025] morning.
..... In
2022, ride-sharing company Uber agreed to a $100 million settlement with the state over allegations that it improperly misclassified nearly 300,000 workers as freelancers rather than employees between 2014 and 2018.
..... Uber executive tired in 2019 to argue that passenger transportation was not in the company's core business, according to media reports, meaning the drivers could not be employees.
..... State officials have argued that by classifying workers like drivers as freelancers, businesses such as Uber and Lyft are able to avoid legally required disability and family leave insurance payments, as well as contributions toward the state's unemployment and temporary disability funds.
..... The practice also deprives workers of traditional protections including minimum wage and overtime, state officials have said.
..... Proponents of freelance work argue that it provides a flexible means to earn extra income, whether it's a delivery driver at DoorDash, an Uber driver, a trucker picking up freight form the Ports of Newark and Elizabeth, a DJ, a freelance wedding photographer or musician, or a journalist.
What rules is the state proposing for gig workers?
..... The state's proposed rules are a culmination of existing case law and statute, which would be codified under the proposal, state labor officials said in an April 28 [2025] notice.
..... Thousands of people and lobbying groups submitted comments in opposition to the proposed rules.
..... to consider someone an independent contractor and not an employee under existing state law, businesses have to use what's called the "ABC test."
..... According to the Labor Department, it requires that freelance workers:
* A: Are free from control and direction by the business
* B: do work outside of a firm's "usual course of business" and "places of business."
* C: Are engaged in an independent, established "trade, occupation, profession or business."
..... For a "transportation network company: - one in which drivers transport rides form one location to another - "the services performed by the driver are likely not outside of the transpiration network company's usual course of business," reads the 33-page proposal.
..... That means freelance drivers would likely not meet the second prong in the ABC test that defines independent contractors.
.... Therefor, they could be considered regular employees rather than freelancers under the proposal, making them subject to employment taxes but also workplace protections not afforded to gig workers.
..... A 2020 state audit, the most recent data available, of 1% of businesses in New Jersey found 7,149 misclassified worker, $443,356,502 in underrepresented wages and $13,694,187 in underreported contributions, including temporary disability, unemployment and family leave insurance. When problems are discovered, the state sends business a bill.
What do governor candidates say?
..... Republican state senators in Monmouth count introduced a bill in August [2025] to block the proposed freelancer rule.
..... And jack Ciattarelli, the Republican nominee for governor, likewise said that if elected, he would nix the proposal, reported New Jersey Business Magazine.
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The Deprecation nominee, Representative Mikie Sherrill, acknowledged the controversy aorta the proposal, saying she would review it if elected and would "have both brisknesses and workers at the table" to develop any proposed rule changes.