diff --git a/tests/test_iterative_telemetry.py b/tests/test_iterative_telemetry.py
deleted file mode 100644
index e0b753e..0000000
--- a/tests/test_iterative_telemetry.py
+++ /dev/null
@@ -1,5 +0,0 @@
-"""Tests for `iterative_telemetry` package."""
-
-
-def test_something():
-    """Test something."""
diff --git a/tests/test_user_id.py b/tests/test_user_id.py
new file mode 100644
index 0000000..289779d
--- /dev/null
+++ b/tests/test_user_id.py
@@ -0,0 +1,49 @@
+"""Tests for user_id lookup/generation"""
+import os
+
+import pytest
+
+from iterative_telemetry import find_or_create_user_id
+
+
+@pytest.fixture(name="tmp_user_config_dir")
+def fixture_tmp_user_config_dir(mocker, tmp_path):
+    def _user_config_dir(appname, *_args, **_kwargs):
+        return str(tmp_path / appname)
+
+    mocker.patch("iterative_telemetry.user_config_dir", _user_config_dir)
+
+    return _user_config_dir
+
+
+def test_find_or_create_user_id(
+    tmp_user_config_dir,
+):  # pylint: disable=unused-argument
+    created = find_or_create_user_id()
+
+    find_or_create_user_id.cache_clear()
+    found = find_or_create_user_id()
+
+    assert created == found
+
+
+def test_legacy_find_or_create_user_id(tmp_user_config_dir):
+    old_config_dir = tmp_user_config_dir("dvc", "iterative")
+    old_config_file = os.path.join(old_config_dir, "user_id")
+
+    find_or_create_user_id.cache_clear()
+
+    os.makedirs(old_config_dir, exist_ok=True)
+    with open(old_config_file, "w", encoding="utf-8") as fobj:
+        fobj.write('{"user_id": "1234"}')
+
+    find_or_create_user_id.cache_clear()
+    assert find_or_create_user_id() == "1234"
+
+    os.unlink(old_config_file)
+    try:
+        os.unlink(old_config_file + ".lock")
+    except FileNotFoundError:
+        pass
+    os.rmdir(old_config_dir)
+    assert find_or_create_user_id() == "1234"