I’ve been following the class-action lawsuit by Uber drivers who are suing Uber Technologies Inc. over their perceived employee status, and are attempting to nail down an hourly wage and overtime. The main lawsuit was filed in California, but drivers in Florida, Illinois, and Massachusetts have also filed a similar, nationwide class-action lawsuit against the ride-sharing company.
Uber drivers say the San Francisco-based company violated the Fair Labor Standards Act and are seeking to recover unpaid overtime wages and work-related expenses. The lawsuit filed in the US District Court of the Northern District of Illinois goes a step further and tries to recover tips that were “earned but stolen by Uber, or were lost due to [Uber’s] communications and policies.”
I have an interest in this story because if these drivers are deemed employees, the next organization with its hands out will certainly be the IRS.
As far as the IRS is concerned, an employee and employer relationship is entered when an employer exerts control over its employee. There are different tests that the IRS uses, but it all boils down to control.
When I decided to write this article, I concluded that I would either have to interview drivers or become one myself. I ended up doing both.
I have a good friend, who I will call “Ryan” for this article, who drives for both Uber and Lyft. By day, he has a very successful job in the telecommunications industry, makes good money, and has great benefits. I didn’t understand why he drove for Uber and Lyft.
About Craig W. Smalley, EA
Craig W. Smalley, MST, EA, has been in practice for almost 23 years. He has been admitted to practice before the IRS as an enrolled agent and has a master's in taxation. He is well-versed in US tax law and US Tax Court cases. He specializes in taxation, entity structuring and restructuring, corporations, partnerships, and individual taxation, as well as representation before the IRS regarding negotiations, audits, and appeals. In his many years of practice, he has been exposed to a variety of businesses and has an excellent knowledge of most industries. He is the CEO and co-founder of CWSEAPA PLLC and Tax Crisis Center LLC; both business have locations in Florida, Delaware, and Nevada. Craig is the current Google small business accounting advisor for the Google Small Business Community. He is a contributor to AccountingWEB and Accounting Today, and has had 12 books published on various topics in taxation. His articles have also been featured in the Chicago Tribune, New York Times, Yahoo Finance, Nasdaq, and several other newspapers, periodicals, and magazines. He has been interviewed and been a featured guest on many radio shows and podcasts. Finally, he is the co-host of Tax Avoidance is Legal, which is a nationally broadcast weekly Internet radio show.