Will Uber app allow me to work only in New Jersey? Is there a way to avoid passengers going to New York?

Not automatically. You would have to check with each ride request

The short answer is no.  You as a driver cannot control whom you will be matched up with, and you cannot even see the destination of the passenger until you accept the ride.

There is a feature within Uber app that allows you to set a preference as to which general direction or locaiton you are headed.  This is meant to be used for drivers who are on their way home or to the location where they prefer to work.  However, this sets, in general direction, where the driver wants to go, not where he doesn't want to go.

After you accept the ride, you could potentially contact the rider and ask whether he or she is going to NYC.  You can politely decline and cancel the trips headed to NY.  (However, Uber does track cancellations, and if you have too many, it will reflect poorly on you.)

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Uber Driver, CEO of TaxiFareFinder and Unleashed, LLC