A couple of solutions to the problem of the windows path being too long are present for gradle:

Add classpath in manifest using Gradle
"The filename or extension is too long error" using gradle

However, it is unclear to me how to handle this in a multi project setup. Would all sub-projects with the application plugin require these changes? Could this also be specified in the init.gradle file?

Also is there a better workaround?

Apparently https://github.com/viswaramamoorthy/gradle-util-plugins/ has been published. However, it does not fix the problems for me. The initial java problem is solved - but not correctly. Some classes can no longer be loaded i.e. unit tests be executed in case of scala.

edit

experimenting with
task testPathingJar(type: Jar) {
        appendix = "testPathing"
        doFirst {
            manifest {
            attributes "Class-Path": configurations.testCompile.files.join(" ")
            }
        }
    }

    compileTestScala {
        dependsOn(testPathingJar)
        classpath = files(testPathingJar.archivePath)
    }    

    task pathingJar(type: Jar) {
        appendix = "pathing"
        doFirst {
            manifest {
            attributes "Class-Path": configurations.compile.files.join(" ")
            }
        }
    }

    compileScala {
        dependsOn(pathingJar)
        classpath = files(pathingJar.archivePath)
    }    

    build {
        dependsOn pathingJar
        doFirst {
            classpath = files("$buildDir/classes/main", "$buildDir/resources/main", pathingJar.archivePath)
        }
    }

unfortunately fails with during shadowJar as the manifest tricks reported in several of the links seem to have a problem with scala:

Cannot infer Scala class path because no Scala library Jar was found. Does project ':tma-mobility-frequencyCounting' declare dependency to scala-library? Searched classpath: file collection.

trying:

    jar {
      manifest {
        attributes(
          "Class-Path": configurations.compileOnly.collect { it.getName() }.join(' '))
      }
    }
fails for task `shadowDistZip` when executing `gradle build` with:

    java.io.IOException: Cannot run program "C:\Program Files\Java\jdk1.8.0_131\bin\java.exe" (in directory "D:\users\username\development\projects\projectName\Code\spark\module_name"): CreateProcess error=206, Der Dateiname oder die Erweiterung ist zu lang

moving gradle user home to the root (also the project) of the partition:

    .\gradlew.bat build --gradle-user-home D:\projects\gradleHome
fails with the same error for task `test`.

When trying the strategy of https://github.com/jhipster/generator-jhipster/pull/4324/files like:

task pathingJar(type: Jar) {
    dependsOn configurations.runtime
    appendix = 'pathing'

    doFirst {
        manifest {
            attributes 'Class-Path': configurations.runtime.files.collect {
                it.toURL().toString().replaceFirst(/file:\/+/, '/')
            }.join(' ')
        }
    }
}

build {
    dependsOn pathingJar
    doFirst {
        classpath = files("$buildDir/classes/main", "$buildDir/resources/main", pathingJar.archivePath)        }
}

task pathingJarTest(type: Jar) {
    dependsOn configurations.runtime
    appendix = 'pathing'

    doFirst {
        manifest {
            attributes 'Class-Path': configurations.runtime.files.collect {
                it.toURL().toString().replaceFirst(/file:\/+/, '/')
            }.join(' ')
        }
    }
}

test {
    dependsOn pathingJarTest
    doFirst {
        classpath = files("$buildDir/classes/main", "$buildDir/resources/main", pathingJarTest.archivePath)        }
}

Fails with

Caused by: org.gradle.api.GradleException: There were failing tests. See the report at: file:///C:/tmp/projectName/moduleName/reports/tests/test/index.html

even though this file never is created

trying one more thing: a fat jar including all the test cases:

task fatTestJar(type: Jar) {
    baseName = project.name + '-test-all'
    from {
        from { configurations.testRuntime.collect { it.isDirectory() ? it : zipTree(it) }}
        from sourceSets.test.output
    }
    with jar
}

however, this does not yet compile.

test {
  doFirst {
    def cp = CollectionUtils.join(File.pathSeparator, classpath.getFiles())
    environment 'CLASSPATH', cp
    classpath = classpath.filter { false }
  }
}

from https://github.com/maiflai/gradle-scalatest/issues/63 is the next step towards a solution.