Uber is testing out a new feature that allows some drivers in California to choose how much they will charge customers. The pilot test, which is taking place at three California airports, is Uber’s latest response to a new California law known as AB5 that makes it more difficult for employers in the state to classify workers as independent contractors. Publishers prepare for new California law that puts limits on freelance journalists.
The new feature will enable drivers at the Santa Barbara, Sacramento and Palm Springs airports to set a fair based on a multiple of Uber’s base, time and distance rates for UberX and UberXL trips. Riders will be paired with drivers offering the lowest rate, according to the company. Drivers who wish to earn more per ride will have to wait longer for trips. Uber’s app will show them a time estimate of how long they’ll likely have to wait before picking up a passenger. The driver can then adjust their rate based on how long they wish to wait.
Uber described the new feature as a way to preserve flexible work for tens of thousands of California drivers. The company said it is an initial test and plans to make additional changes to improve drivers’ control over their pay. California’s new law, which went into effect on January 1, requires employers to provide minimum wage, workers’ compensation, overtime pay, sick time and unemployment insurance to any worker that it cannot prove is an independent contractor.
In Uber’s (UBER) case, the company must prove that drivers are free from company control and perform work that is outside the usual course of business. Uber has said classifying drivers as employees would force it to take on significant costs and it could potentially upend its business model. The company has taken a number of steps to fight the California legislation that passed in September 2019. Uber and delivery startup Postmates are suing California, claiming that the legislation violates the US and California constitutions.
Uber also joined Lyft (LYFT) and DoorDash in sponsoring a 2020 ballot initiative that would exempt them from the legislation, but still offer drivers some benefits. The initiative guarantees that drivers would make 20% more than the minimum wage and 30 cents per mile for expenses, such as gas and vehicle wear and tear. Some critics have suggested that the recent move to allow drivers to set their own rates is a way for Uber to garner support in its fight against AB5.
“Don’t buy it,” tweeted Veena Dubal, a law professor at the University of California Hastings College of the Law. “It is about swaying public and driver opinion for their awful ballot initiative.”