Uber just recently announced that they are expanding the area where drivers can set their own rates to include San Francisco, Modesto, Santa Barbara, and San Luis Obispo. Uber allowing drivers to set their own rates for trips began as an experiment in January in Sacramento, Santa Barbara and Palm Springs. Before January, drivers in these areas had no control over the rates.
Many feel this is a thinly veiled attempt by Uber to skirt around the new AB5 law that took effect at the beginning of this year. Uber has vehemently opposed the new AB5 law which attempts to classify gig-workers, such as Uber drivers, as employees rather than contractors. By re-classifying Uber drivers as employees Uber stands to lose millions annually by having to pay out various employee benefits. Allowing drivers to set their own rates is one way that Uber is trying to prove that their drivers are in fact independent contractors. However, legal experts say that the new pricing change is unlikely to convince a court that AB5 does not apply to Uber.
According to NBC News, assembly member Lorena Gonzalez, the author of AB5, said in an email that “Uber’s latest attempts to pretend drivers are setting their own rates to circumvent AB5 are woefully deficient, Uber drivers are employees and deserve a minimum wage, overtime, unemployment insurance and workers compensation.”
Apparently, after Uber tested this new pricing dynamic in Sacramento in January, drivers saw an overall decrease in weekly wages. As many drivers like to put it, the ability to choose your own rates creates a race to the bottom as drivers are pitted against one another.
What are your thoughts on this new pricing dynamic? Do you support or oppose the ability to set your own rates?