Another Unemployment Setback for Gig Economy Companies Using Independent Contractors: April 2023 IC Legal News Update
We reported in our October 10, 2022 blog post that Uber had agreed to pay $100 million in back unemployment taxes to the New Jersey Department of Labor for having classified drivers as independent contractors. Another state workforce agency has now joined New Jersey in obtaining substantial tax payments from a gig economy company for unpaid unemployment taxes related to its designation of workers as ICs instead of employees. Last month, an appellate court in Wisconsin, a state which has a challenging independent contractor test for unemployment insurance purposes, affirmed the state Labor Commissioner’s assessment of unemployment taxes against Amazon with regard to drivers who deliver the company’s products. With interest, the assessment per gig worker in Wisconsin is likely to exceed the per-worker amount that Uber paid to New Jersey. What does this mean for companies using an IC business model? For those companies that have chosen to utilize a compliance process such as IC Diagnostics (TM), the typical starting point is a review of the IC relationship under federal and state wage and hour laws. That is followed by a review of the varying IC tests under applicable state unemployment insurance, workers’ compensation, and wage payment laws – all part of a process to restructure, re-document, and/or re-implement IC relationships in a customized and sustainable manner designed to minimize liability for independent contractor misclassification.
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