What Lyft’s $19.4 Million Misclassification Payment Means for New Jersey Rideshare Drivers

In September 2025, the New Jersey Department of Labor and the Office of the Attorney General announced that Lyft had submitted more than $19.4 million to the state after an audit found the company improperly classified over 100,000 drivers as independent contractors between 2014 and 2017. Lyft contested the audit for years. It paid anyway.

For New Jersey drivers, the announcement is more than a headline. It is the state itself concluding, after a full audit and years of pushback, that rideshare drivers were treated as employees under New Jersey law. In our view, that conclusion has consequences that reach well beyond the state’s own recovery.

What New Jersey Announced

According to the state’s announcement, Lyft paid $19,435,087.06: more than $10.8 million in past-due contributions, plus roughly $8.5 million in penalties and interest. The money went to New Jersey’s unemployment, temporary disability, and family leave insurance trust funds and to the state’s workforce development funds. Those are the safety-net programs that go unfunded when a company calls its workforce independent contractors, and the audit began after Lyft drivers filed for unemployment and disability benefits that the company had never paid into.

This is not the state’s first result of its kind, or even its largest. A New Jersey audit reached the same conclusion about the biggest rideshare company, which paid the state $100 million in a driver misclassification case in 2022. Whatever the apps say in their terms of service, New Jersey keeps auditing them and keeps finding employees.

Why It Is Hard to See How Lyft Could Prevail on Prong B

New Jersey decides employee status with the ABC test. A worker is presumed to be an employee unless the company proves all three of the following: (A) the worker is free from the company’s control and direction; (B) the work is outside the usual course of the company’s business, or performed outside all of the company’s places of business; and (C) the worker is engaged in an independently established trade or business. The Department of Labor’s guidance explains the test in plain language.

The company carries the burden on every prong, and losing any one of the three ends the inquiry. That is what makes Prong B so important here. Prong B asks whether the driver’s work is outside the usual course of the company’s business. Lyft’s business is rides. Its drivers provide the rides. In our opinion, it is very difficult to see how Lyft could prevail on Prong B, because the service the drivers perform is not incidental to the business; it is the business.

The Same Test Decides Your Wage Rights

Here is the part that matters most for drivers. The ABC test is not just about unemployment contributions. The New Jersey Supreme Court has held that the same test determines whether a worker is an employee under the state’s wage statutes. In other words, the analysis that just cost Lyft $19.4 million is the same analysis that decides whether a driver has employee rights under laws like New Jersey’s wage payment protections, strengthened by the 2019 Wage Theft Act.

Those laws come with teeth. An employer cannot take deductions from an employee’s pay that are not for the employee’s benefit. And in our view, the law requires the employer, not the worker, to carry the costs of running the employer’s business: the gas, the tolls, the vehicle wear, the insurance, and the phone that make every trip possible. Misclassified drivers may also have claims for minimum wage shortfalls and unpaid overtime, and New Jersey wage claims may reach back up to six years, with liquidated damages available on top of the unpaid amounts.

The State Got Paid. Drivers Have Not.

Every dollar of the $19.4 million went to state funds. None of it went into drivers’ pockets. The state’s audit squared Lyft’s account with New Jersey’s benefit programs; it did not resolve any driver’s individual claim for wages, deductions, or expenses. Those claims still belong to the drivers themselves.

Most driver agreements try to keep those claims out of court through arbitration clauses and class action waivers. Our answer is to bring them anyway, one driver at a time, in individual arbitration, where the company typically must pay most of the arbitration costs under its own agreement.

What Lyft Drivers in New Jersey Should Do Now

Start by saving your records: weekly earnings summaries, screenshots of hours and miles, and receipts for gas, tolls, insurance, and your phone plan. Those documents turn an argument into a claim.

Frequently Asked Questions

Do I get a share of the $19.4 million Lyft paid?

No. That payment replenished New Jersey’s benefit trust funds. It did not compensate drivers, and in our view it leaves drivers’ individual wage and expense claims fully on the table.

I drive for delivery apps, not Lyft. Does this matter to me?

Yes. The same ABC test applies to couriers and shoppers for DoorDash, Grubhub, Instacart, and Amazon Flex. If the platform prices the work, assigns the work, and can deactivate you, the analysis in our opinion looks much the same.

How long do I have to bring a claim?

It depends on the claim, but New Jersey wage claims may reach back up to six years. Waiting costs recoverable wages, so it makes sense to ask early. If you worked for a Rideshare or Gig Work company in New Jersey in the last six years, you can take our quick survey and sign up today at https://gigdriver.lawyer