As the pandemic continues, the US government has decided to provide jobless benefits to the employees who lost their jobs. And in turn, employers are obligated to pay the Unemployment Insurance tax for each employee.
Amid the crisis, people that work for Uber and Lyft have also lost their jobs and are now hoping to get an Unemployment benefit. However, before receiving the benefit, their employers must pay the tax to the Californian government.
But the problem is, Uber and Lyft don’t consider their drivers as employees. As two of America’s most prominent transportation companies, they consider their drivers independent contractors. So, both the companies haven’t paid the Unemployment Insurance tax since the very beginning.
How Much Do Uber and Lyft Owe the Government?
The Unemployment Insurance tax rate in California is 3.4% of pay for the new employers. And the taxable wage limit is $7,000 a year per employee. And if Uber and Lyft drivers are to get the benefit, their employers owe the state government $413 million as unpaid find from 2014 to 2019.
The California Employment Development Department has classified drivers as employees entitled to unemployment benefits on different occasions since 2015.
However, both the companies have long been opposing the state’s AB-5 gig-worker law. They claim that the law is unconstitutional, and Uber has even sued the state for the same.
But, in a turn of events, the California State filed its own lawsuit suing the two transportation companies. It claims that the companies have been “misclassifying drivers as contractors and pushing the financial burden onto taxpayers,” as their drivers get ready to collect the unemployment benefit.