Surprise! Uber May Have Engaged In Massive Wage Theft In NYC

Does Uber management spend each and every day thinking about how it can rip more people off and create even more bad publicity for the company? It certainly appears so. Today’s Uber revelation was that the company was deducting its commission based on the full fare, which includes taxes and fees, rather than the lower cost of the ride only, essentially bilking tens of millions in commissions from drivers in New York City over the last few years.

Uber has agreed to pay these drivers back with interest. But the revelation raises even more troubling questions for Uber about who actually pays for those sales taxes and fees. In New York, those taxes and fees can be pretty hefty, with a 9% sales tax and a 2.5% fee to cover workers’ compensation and other benefits. These fees are supposed to be paid by the passenger, essentially as an addition to the fare and then passed on to the state. But Uber is apparently deducting these taxes and fees from the drivers’ pay, essentially making the drivers pay the tax. Uber’s response is that the taxes and fees are included in the fare, using the example of selling a slice of pizza for $1 that includes the sales tax.

Unfortunately, Uber’s receipts for drivers show that this is not the case. Out of state trips in New York, which are frequent in New York City, are not charged sales tax by the state. Uber, however, charges the same fare regardless of whether the destination is in-state or out of state, implying that sales tax is not included in the fare.

If, as it appears, Uber is making the drivers pay these taxes and fees, then it is a clear case of wage theft. A driver advocacy group in New York is already making that claim. Estimates are that the wage theft could amount to more than $200 million and, if the case is proved, the drivers could receive double the compensation.

I have written many times about Uber’s continual criminal and ethical breaches. Does any one doubt that wage theft and avoiding its share of taxes is not typical of Uber’s approach to business? And this case in New York raises the question of what happens in other jurisdictions where government levies taxes and fees. If Uber was willing to flout the law in New York, one of its most important markets, you can be sure they are doing that in other localities that are far less influential and important.

It really is time to RICO this serial criminal enterprise called Uber into oblivion.