Uber could have to pay additional $209M to reclassify California drivers
Uber continues to insist that several of its drivers prefer to be considered as contract workers as the ride-sharing company is well aware of the fact that reclassifying its drivers as employees will drastically inflate its costs.
In California, a very small group of Uber drivers have dragged the company to court, arguing that they should be considered as employees; rather than contract workers. In response, the company submitted statements of support from many of its drivers who say they prefer being contract workers to employees.
It is but natural for Uber to prefer to consider its drivers as contract workers as its app-based ride-sharing business is founded on that very idea. However, potential increase in costs resulting from considering drivers as its employees is also discouraging the company from reclassify its drivers in the Golden State.
While Uber repeatedly declined to comment on additional costs that it would have to bear after reclassify its California drivers as employees; ZenPayroll, which automates paycheck systems for small-&-medium-sized businesses has estimated that the change would cost the company an additional $208.7 million per year.
ZenPayroll explained that Uber would likely have to pay around $89.1 million for payroll taxes for 45,000 of its drivers and nearly $119.6 million annually in workers' compensation insurance. The figures translate into additional cost of $4,637 per employee in the Golden State. Those expenses don't include the cost of gas or vehicle repair.
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