UBER LETS IT ROAR
Driver fare freedom
Uber is shaking up its pricing model yet again to fend off a legislative crackdown over how it pays its drivers.
The ride-hailing giant on Tuesday said drivers can now charge up to five times more for rides at three California airports — Santa Barbara, Sacramento and Palm Springs — as it seeks to keep the Golden State’s new gig-worker law at bay.
The test marks the latest effort by Uber to give drivers more flexibility over what they charge in response to AB5, a California law that raises the potential for Uber’s drivers to be classified as employees instead of independent contractors. As employees, drivers would be entitled to perks like minimum wage, paid sick days and unemployment insurance.
Earlier this month, the ride-hailing giant also scrapped upfront pricing for certain California rides, meaning passengers only see a price range rather than an exact fare before they book a trip.
The company, led by CEO Dara Khosrowshahi (inset), has also begun showing drivers the destinations and fares for trips upfront when they’re deciding whether to accept or reject rides.
“Since AB5 has gone into effect, we’ve made a number of product changes to preserve flexible work for tens of thousands of California drivers,” Uber spokesman Harry Hartfield said in a statement. “We’re now doing an initial test of additional changes which would give drivers more control over the rates they charge riders.”
Drivers accepting trips at the airports can multiply Uber’s rates for private UberX and UberXL rides by a factor as high as five in increments of 0.1, the company said. Starting next week, drivers can also set their so-called fare multiple below 1, meaning passengers would pay less than Uber would normally charge, according to the company.
Uber will connect a passenger who orders a trip with the driver offering the lowest price, according to The Wall Street Journal, which first reported on the program. Drivers with higher prices will reportedly be given trips as more riders order them. Uber said the program will evolve in the coming weeks and months.
If the test is a success, experts say to expect to see similar measures taken by its competitors. D.A. Davidson analyst Tom White speculated that the pricing options could result in an “inflationary impact” on the cost of Uber rides.
“I think it’s fair to assume that any product tweak or innovation that either catches on with consumers in a big way or helps improve the standings of the business in the eyes of regulators will be fast followed by the competition,” White told The Post.
White added that it is “just a matter of time” before other states follow California’s lead “to some degree.”
“It’s a pretty easy sort of political position for state lawmakers to take when you talk about guaranteeing a living wage and benefits for people who deserve them,” he said.