Uber retools California fares in response to gig economy law
Move is latest change by firm to bolster case that drivers are independent workers
SAN FRANCISCO— Uber Technologies Inc. retooled the way it calculates some fares in California to give drivers for the ride-hailing company a way to earn more, part of its response to the state’s new gig-economy law.
The changes rolled out Wednesday, following other adjustments made in December, are part of Uber’s effort to bolster its case that the law, which went into effect Jan. 1, wouldn’t require it to reclassify drivers as employees.
Starting Wednesday, Uber capped its commissions on rides across the state and will let drivers see how much they make on certain trips.
California’s Assembly Bill 5, or AB5, establishes a test that employers must pass to classify their workers as independent contractors. Employers who don’t meet the test must treat their workers as employees entitled to benefits including minimum wage and paid sick days.
At least two lawsuits have been filed in federal court, saying that Uber
misclassified drivers, citing the new law.
Uber—whose business relies on independent contractors— sued California last month, arguing the law is unconstitutional. Shortly after the law was passed in September, Uber joined forces with Lyft Inc., Postmates, DoorDash and Instacart to fund a 2020 ballot initiative that would ask voters to effectively exempt them from the statute.
The companies have amassed $110 million to support the measure, which would preclude further legal challenges and invalidate any current litigation.
Uber said its service fee for rides in California wouldn’t exceed 28%.
It also unveiled other measures such as showing drivers exactly how much they would earn on each pooled pickup, as opposed to showing an overall estimate for the ride.
Uber said last month it would allow its more than 150,000 drivers in California to see where potential riders were going, in effect letting them choose the trips they felt were worthwhile.
“AB5 threatens to restrict or eliminate opportunities for independent workers across a wide spectrum of industries,” an Uber spokesman said in an emailed statement. “As a result of AB5, we’ve made a number of product changes to preserve flexible work for tens of thousands of California drivers.”
Uber has insisted that it isn’t a transportation company, but rather a technology platform that brings drivers and riders together.