Uber has been ordered to pay close to $650 million in employment taxes in New Jersey after the state’s department of labor said the ride-sharing company misclassified its drivers as independent contractors, according to a Bloomberg report.
Bloomberg Law first reported Thursday that New Jersey has hit Uber and subsidiary Rasier LLC with $523 million in past-due taxes for the last four years. In addition, the companies face as much as $119 million in interest and penalties on the unpaid amounts.
Uber maintains that its drivers are independent contractors, saying it is determined to fight the assessment.
“We are challenging this preliminary but incorrect determination, because drivers are independent contractors in New Jersey and elsewhere,” an Uber spokesperson told Bloomberg Law.
Bloomberg Law said an open public records request revealed that New Jersey’s labor department has been pursuing Uber for unpaid employment taxes for at least four years.
Uber faces a similar dilemma in California, where it is fighting a recently passed state measure that would reclassify gig economy workers as employees, potentially entitling them to perks including a minimum wage and sick time.
Companies including Uber, Lyft, and DoorDash have pledged to spend $90 million to fight the law, which poses an existential threat to their business models.
Uber is facing an unrelated lawsuit in New York by a class of 96,000 drivers seeking repayment for fees deducted from their fares.
In New Jersey, the state’s tax determination against Uber is limited to unemployment and disability insurance, according to Bloomberg. The news outlet reported that Uber’s costs per driver could increase by more than 20% if it were forced to reclassify workers as employees.
The state’s department of labor did not reply to a request for comment from Breitbart News.