09-30-2025
Ride-sharing company Lyft reached a settlement with the New Jersey Department of Labor and Workforce Development over driver misclassification. A state audit was triggered by Lyft drivers who filed for unemployment insurance and disability benefits. The state investigated and found that the company had misclassified more than 100,000 workers as freelancers when they were regular employees and had not contributed to state funds on the drivers’ behalf. Of the $19.4 million, $10.8 million compensates for unemployment, family leave, and disability taxes that Lyft allegedly did not pay between 2014 and 2017. It will also include $8.5 million in penalties and interest.
New Jersey is reportedly considering changes to its existing independent contractor rules so that more freelance workers will qualify as employees. The changes would apply to truck drivers and Uber, Lyft, DoorDash, and Grubhub drivers. To be considered an independent contractor under the proposed changes, workers would have to be a) free from control and direction of the business; b) perform work outside of a firm’s “usual course of business” and “places of business”; and c) be engaged in an independent, established “trade, occupation, profession, or business.” Gig drivers would not likely meet the second prong of the proposed changes. New Jersey’s two candidates for governor disagree about the proposal, so it is unknown whether it will move forward.
A Lyft spokesperson stated that the company disputed New Jersey’s finding but would “not be pursuing further challenges to the assessment.” Uber agreed to an even larger settlement with New Jersey in 2022, paying $100 million to resolve allegations that it improperly classified almost 300,000 workers as independent contractors rather than employees between 2014 and 2018.