Gig Economy

California Gig Decree Prompts Uber To Halt Upfront Pricing

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Uber is dropping upfront pricing in favor of estimates in response to the California gig economy law that took effect Jan 1.

Reuters saw an email to riders and drivers on Wednesday (Jan. 8) advising them that the final price of a trip would be calculated at drop-off “based on the actual time and distance traveled.”

“Due to a new state law, we are making some changes to help ensure that Uber remains a dependable source of flexible work for California drivers,” the company said in the email.

“These changes may take some getting used to, but our goal is to keep Uber available to as many qualified drivers as possible, without restricting the number of drivers who can work at a given time,” continued the email. “We want your Uber experience to be excellent, and fewer drivers on the road would mean a more expensive and less reliable service for you.”

The new law prompted Uber to revise its app, giving California rideshare drivers detailed information about a trip — fare, length, destination — before they accept it. Riders will be able to schedule rides with favorite drivers.

An Uber blog post said the changes were in response to California’s AB5 law. Other revisions include Uber’s cut of the fares, which will now be a maximum fixed rate of 25 percent instead of fluctuating fees. A 28 percent remains in effect for all UberXL, Comfort, SUV and Lux trips. 

The changes are intended to convince California lawmakers that as independent contractors, Uber drivers have control over when, where and how they work. The rideshare giant maintains that it is a technology platform that links riders with drivers, not a transportation company.

The law classifies gig workers as employees, which requires higher pay, medical insurance and other benefits.  

Uber and the delivery app Postmates have filed a lawsuit against the state of California. Two organizations representing freelance journalists also filed a lawsuit, saying AB 5 restricts free speech by effectively limiting the number of articles a contract journalist can write for the same publication. The trucking industry also said that the law would make it impractical, if not impossible, to use contractors across state lines.



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