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Uber is letting some drivers set their own fares (to avoid paying them as employees)

Snacks / Tuesday, January 21, 2020
"_Yes, we are very technological_"
"_Yes, we are very technological_"

I'm an app, duh... Uber, to the California government. Uber is now letting some CA drivers set their own fares as part of a test in response to CA's new gig-economy law (aka, AB5). The law forces companies like Uber, Lyft, or Postmates to treat workers as employees (give them sick days, benefits, etc). But Uber wants to prove its drivers are independent contractors. So it's made these changes:

  • Last month, Uber let CA drivers see where riders are going before deciding whether to accept or reject a ride (wasn't a thing before).
  • This month, Uber put a 25% cap on commissions drivers pay to Uber.
  • Now, Uber is letting drivers who pick-up/drop-off from airports in Santa Barbara, Palm Springs, and Sacramento price their rides up to 5X basic Uber fares (or charge as little as 1/10th).

It's a tech company, I swear... Uber's trying to prove it's just an app with independent drivers (nothing to see here), in an effort to dodge the 20%-30% cost increase that would come with turning their contractors into employees. The gig-law could also make rides pricier for riders, which could reduce demand for rides overall.

Uber's current pricing method is all about efficiency... 11PM Saturday rides are pricier than 10AM Sunday rides because surge pricing factors in demand. This new bidding-style pricing might mean higher fares for drivers, but could also mean lower fares if drivers compete for the cheapest price. This auction-like system is less efficient, but Uber is hoping it'll help prove that drivers have autonomy, and should therefore be treated not like employees.

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