Minimum Wage & Taxi Employees
In most cities, taxi drivers work as independent contractors instead of as employees, so they are not subject to federal minimum wage laws. This can be a blessing or curse, because taxi drivers can make a very good living or actually lose money on the job. Under this arrangement, cab companies are exempt from providing worker's compensation or other insurance.
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Pitfalls and Benefits of Independence
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Working as an independent contractor is a form of self-employment, so guarantees cannot be made about the driver's income. As an independent contractor, drivers must obtain their own health insurance and plan on how they will pay taxes. But this arrangement carries all the benefits of owning a business, as the driver is free to set his own hours and work any area he chooses.
How Drivers Are Paid
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Depending on the company, independent taxi drivers either keep a percentage of fares collected, or pay the cab company an agreed-upon amount to lease the cab. Lease fees can run upwards of $500 per week, and the driver generally pays for his own gas. Even if the driver owns his vehicle, he is likely to pay the cab company a "terminal fee," which covers insurance and dispatch services. On a percentage arrangement--often a 50/50 split of fares--the driver will pay for gas but keep any tips.
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Independent Contractor Issues
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Many taxi companies try to work around independent contractor law by assigning drivers a work schedule or exercising some other control over how the driver operates. Generally, an independent contractor cannot be fired from his job, and may work at whatever time or in whatever style he chooses.
A Cab Company in Court
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In 2002, the South Carolina Supreme Court heard a worker's compensation case for the family of a driver who was killed in a 1998 taxi robbery. The court ruled that the key issue in the case (Nelson v. Yellow Cab) was whether the driver was an employee or independent contractor. After looking at the relationship between company and driver, the court decided he was an employee and awarded the family worker's compensation benefits
Can Drivers Make Money?
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A taxi driver can indeed make a good living; a particularly hard-working or lucky one can bring home $1,000 per week, depending on the city. It takes long hours to achieve this, though. On a lease arrangement, it usually takes between six and eight hours to meet daily expenses, so he merely breaks even if he works a 40-hour week. To make good money, a driver may spend more than 12 hours a day in his cab, six or seven days a week.
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References
- Photo Credit Calling for a taxi image by painless from Fotolia.com
