The ride-sharing company Lyft paid $19.4 million to the New Jersey Department of Labor and Workforce Development after an audit found that the company improperly classified more than 100,000 drivers as independent contractors, depriving them of safety-net benefits by failing to make required contributions from 2014 to 2017.
An audit was triggered when Lyft drivers filed for unemployment insurance and disability benefits, revealing that Lyft had not made contributions to the state funds on their behalf. By misclassifying the drivers, the state said Lyft impeded their access to benefits and protections, including unemployment compensation, temporary disability benefits and family leave benefits.
“New Jersey’s rigorous enforcement of employee classification laws protects workers and law-abiding employers alike,” said New Jersey Labor Commissioner Robert Asaro-Angelo. “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.
“Although many allege that being an employee stifles flexibility, this couldn’t be further from the truth. There is no reason temporary or on-demand workers who work flexible hours, or even minutes at a time, can’t be treated like other employees.”
Gov. Phil Murphy’s administration has been aggressive in addressing employee misclassification in New Jersey. The state has enacted several legislative measures aimed at addressing this issue, including the establishment of the Office of Strategic Enforcement and Compliance within the NJDOL, the creation of a database to track payroll projects, and the introduction of a misclassification penalty. The legislation has empowered authorities to implement stop-work orders at worksites where misclassification is detected.
In the audit of Lyft, NJDOL examined the company’s books and records from the four-year period of 2014 to 2017. Lyft was assessed more than $10.8 million in past due contributions, plus penalties and interest of $8.5 million. In 2022, Lyft contested NJDOL’s findings, and the case was shifted to New Jersey’s Office of Administrative Law for a hearing.
Lyft initially paid the more than $10.8 million assessed for contributions to stop the running of interest, while continuing to contest the department’s assessment. In August 2025, days before the first hearing date at the OAL, Lyft withdrew its request for a hearing and paid the remaining balance owed of $8,540,937.25 for penalties and interest.
When a worker is misclassified as an independent contractor, they lose rights which they are entitled to as employees, including minimum wage, overtime pay, workers’ compensation coverage, unemployment insurance, earned sick leave, family leave, and other benefits.
As independent contractors, workers are not protected by workplace safety laws, equal pay protections, and other employment-related rights. Employers who misclassify workers avoid making mandatory contributions to the UI Trust Fund.
