Uber might have constructed its hailing empire, partially, by notoriously skirting past native legal guidelines and laws, however a minimum of one state’s lastly forcing the corporate to pay up.

On Tuesday, Uber agreed to pay New Jersey $100 million in again taxes over claims the corporate misclassified hundreds of drivers as impartial contractors between 2014-2018. That mischaracterization, in response to an audit performed by the New Jersey Department of Labor and Workforce Development, might have prevented hundreds of employees from with the ability to obtain crucial sources like unemployment, incapacity and household depart insurance coverage. Though narrowly centered on New Jersey employees, the payout probably marks an inflection level for drivers throughout the nation who’ve, for years, refuted Uber’s labeling of them as so-called “gig workers.”

“We will not tolerate companies that misclassify their workers, thereby denying employees vital benefits and dodging their obligation to contribute to programs that benefit the workforce,” New Jersey Acting Attorney General Matthew Platkin mentioned in a statement. “By misclassifying workers, companies both harm their employees and sidestep their obligations under the law. New Jersey will continue to enforce our employee misclassification laws aggressively to prevent such conduct.  As the economy changes, we will vigorously defend workers’ rights.”

The $100 million positive reportedly represents the biggest of its type ever recorded in New Jersey nevertheless it may have really been a lot bigger. The authentic Department of Labor audit sought over $1 billion value of again taxes when it first fined the corporate in 2019 according to paperwork despatched to Gizmodo by Uber. In complete, the company initially claimed Uber and Raiser (an Uber subsidiary) owed $522 million and $528 million, respectively. In hindsight, the Department of Labor says these figures had been “rough estimates based on incomplete data.” Uber in the end agreed to pay $12.1 million whereas Raiser paid $88 million.

Despite agreeing to the positive, Uber mentioned it didn’t quantity to a settlement. Uber’s additionally sticking to its weapons on the gig work classification lingo.

“Drivers in New Jersey and nationally are independent contractors who work when and where they want—an overwhelming amount do this kind of work because they value flexibility,” Uber mentioned in a press release despatched to Gizmodo. “We look forward to working with policymakers to deliver benefits while preserving the flexibility drivers want.”

Robert Asaro-Angelo, New Jersey’s Labor Commissioner, forcefully disagreed with that place in a press release.

“Let’s be clear: 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 in New Jersey or any other state,” Asaro-Angelo mentioned. “We will not bow to the whims of corporations’ latest business models that are based on eroding long-standing protections.”

New Jersey’s historic positive comes as different states across the nation grapple with laws aimed toward combating, or in some circumstances, facilitating, the gig work economic system. In 2020, California narrowly handed a controversial gig-company-backed poll initiative known as Proposition 22 which sought to roll again labor legal guidelines requiring firms like Uber to categorise employees as workers. Uber, Lyft, Doordash and related firms created the initiative and reportedly spent greater than $200 million to push ahead the measure. Luckily for the state’s gig employees, a California choose struck down the proposal final 12 months on constitutional grounds.

Unconstitutional or not, that hasn’t stopped different states from making an attempt to create their very own laws modeled after Prop 22 although to date, these have but to really materialize. Earlier this 12 months, gig work firms reportedly spent $17.8 million to cross a poll initiative in Massachusetts which might have formally categorised gig employees as impartial contractors as a substitute of workers. That initiative fell flat after the state’s Supreme Court dominated the proposal unconstitutional, due partially to its “vaguely worded provisions.” In different states like New York, nonetheless, gig work firms are taking a sneakier method and are reportedly negotiating with main labor unions to let employees arrange for sure points like minimal pay, however below the formal classification of impartial contractors.

Now, with Uber licking its wounds in New Jersey, the state ecosystem as soon as deemed ripe for gig firm interference all of a sudden appears much less weak. Other states much less sympathetic to gig work’s underlying enterprise mannequin may probably comply with New Jersey’s lead, which might create a large headache for dozens of firms counting on mischaracterized labor. More critically, aggressive regulatory actions from states may put some cash and sources again into the pockets of gig employees. Around 16% of U.S. adults surveyed by Pew Research final 12 months mentioned they earned cash via some kind of gig platform.