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A24 TECHNOLOGY
Friday 15 November 2019

New Jersey seeks $640M from Uber for misclassifying workers

By MIKE CATALINI and under state law, including
CATHY BUSSEWITZ that the services performed
The Associated Press fall outside the employer’s
TRENTON, N.J. (AP) — New usual course of business.
Jersey is seeking more than Worker classification is im-
$640 million from Uber in portant because taxpayers
taxes and penalties, saying foot the bill for unemploy-
the ride-hailing company ment or disability insur-
misclassified its drivers as in- ance when independent
dependent contractors. contractors file for benefits,
The decision is the latest said Robert Asaro-Angelo,
setback for Uber and other New Jersey’s labor com-
companies in the so-called missioner, in a statement.
“gig economy” that rely “This defiance of the law
heavily on contract labor puts honest business own-
to deliver the services at ers at an unfair disadvan-
the heart of their popular tage,” he said.
apps. The New Jersey Depart-
Worker advocates say that ment of Labor and Work-
job classification hurts the force Development de-
laborers and the states clined to discuss the case
where they live, which miss or say whether it is seeking
out on tax revenues. In this Friday, Aug. 16, 2019 file photo, the logo for Uber appears above a trading post on the floor similar restitution from Lyft
New Jersey’s labor depart- of the New York Stock Exchange. or other gig economy com-
ment told Uber it, along Associated Press panies. Lyft, which is also
with its subsidiary Rasier, based in San Francisco, de-
owes $523 million in over- clined to comment.
due taxes form the last four But Wall Street reacted,
Amazon appeals $10B Pentagon years and is also facing with stocks extending their
fines and interest of $119
downward spiral.
contract won by Microsoft million, according to letters Uber’s shares closed Thurs-
from the department that
day at down 72 cents, or
were first reported Thursday
by Bloomberg Law. 2.7%, at $25.99. Lyft shed
SAN FRANCISCO (AP) — Uber disputed the state’s $1.38, or 3.2%, to $41.92.
Amazon is protesting the findings. “We are challeng- Both stocks are 42% below
Pentagon’s decision to ing this preliminary but in- their initial public offering
award a $10 billion cloud- correct determination, be- prices from earlier this year.
computing contract to cause drivers are indepen- The threat of classifying
Microsoft, citing “unmistak- dent contractors in New workers as employees is the
able bias” in the process. Jersey and elsewhere,” the single biggest worry among
Amazon’s competitive bid San Francisco-based com- investors in companies such
for the “war cloud” project pany said in a statement. as Uber and Lyft, said Dan
drew criticism from Presi- The move was hailed as a Ives, managing director at
dent Donald Trump and its victory by those pushing for Wedbush Securities. Many
business rivals. The project, better working conditions thought the threat could
formally called the Joint En- for Uber’s drivers. Many of materialize eventually but
terprise Defense Infrastruc- Uber’s workers are part- weren’t expecting it within
ture, or JEDI, pitted lead- time, but others work long months of the companies’
ing tech titans Microsoft, hours and rely on ride-hail- IPO. “It adds the black
Amazon, Oracle and IBM ing as their sole source of clouds over Uber, Lyft and
against one another income. the overall gig economy,
In a statement Thursday, “I have clients who are as their business models
Amazon said that “numer- Uber drivers that are sleep- were built on contractors,”
ous aspects” of the bidding ing in their cars because Ives said. “It’s an absolute
process involved “clear de- they cannot afford the ba- nightmare scenario that
ficiencies, errors, and un- sic necessities, they can’t continues to plague the
mistakable bias.” It did not This combination of file photos shows the logos for Amazon, top, afford a place to live,” said gig economy stocks.”
elaborate. and Microsoft. . Amazon is protesting the Pentagon’s decision Shannon Liss-Riordan, part- California, which repre-
to award a huge cloud-computing contract to Microsoft, citing
Amazon added that “it’s “unmistakable bias” in the decision. ner at Lichten & Liss-Rior- sents Uber and Lyft’s largest
important that these mat- Associated Press dan, who has represented source of revenue, passed
ters be examined and rec- drivers in the employment a law requiring companies
tified.” Microsoft did not im- gence to speed up its war rience handling highly clas- classification cases. “That’s such as Uber and Lyft to
mediately respond to a re- planning and fighting ca- sified government data. not acceptable.” classify drivers as employ-
quest for comment. A De- pabilities. It survived earlier legal chal- New Jersey has among the ees instead of independent
fense Department spokes- Amazon was long thought lenges after the Defense strictest tests for determin- contractors, which would
woman would only say that to be the front-runner in the Department eliminated ri- ing whether a worker quali- give them protections such
the Pentagon won’t specu- competition for the huge val bidders Oracle and IBM fies as an independent as minimum wage, health
late on potential litigation. military contract. Its Ama- and whittled the competi- contractor. To be consid- benefits and the ability to
JEDI will store and process zon Web Services division is tion down to the two Seat- ered an independent con- unionize. That law is set to
vast amounts of classified far ahead of second-place tle area tech giants before tractor requires meeting all go into effect Jan. 1, but
data, allowing the U.S. mili- Microsoft in cloud comput- choosing Microsoft in late three prongs of a test set up Uber and Lyft have been
tary to use artificial intelli- ing, and Amazon has expe- October.q pushing for a carve-out.q