Lyft Pays $19.4 Million to Settle Worker Misclassification Audit in New Jersey

Lyft has paid $19.4 million to the state of New Jersey to resolve allegations that it misclassified more than 100,000 drivers as independent contractors instead of employees. The settlement comes after a multi-year audit conducted by the New Jersey Department of Labor and Workforce Development, which reviewed the company’s employment practices from 2014 through 2017. Lyft withdrew its request for a hearing, choosing instead to resolve the matter and avoid further legal proceedings.

According to state officials, including Attorney General Matthew Platkin, the misclassification deprived drivers of access to benefits such as unemployment insurance, temporary disability coverage, and paid family leave. Lyft was assessed over $10.8 million in unpaid contributions to state benefit funds, and an additional $8.5 million in penalties and interest. The company initially paid the contributions to halt interest accrual and later paid the remaining balance after dropping its appeal.

This case underscores broader concerns from regulators nationwide about gig economy giants like Lyft and Uber. Many argue that classifying workers as independent contractors limits their access to essential labor protections, including minimum wage, overtime, and paid sick leave. New Jersey Labor Commissioner Robert Asaro-Angelo stated that even flexible or on-demand workers can and should be afforded the same rights as traditional employees.

While Lyft maintains it acted in compliance with state law and insists that drivers prefer flexibility, this settlement follows a similar $27 million agreement reached with Massachusetts earlier in 2024, signaling an ongoing shift in how states address gig worker classification.