Uber drivers in California can now set their own rates on select airport pickups
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
California Uber drivers have officially started to test setting their own UberX fares.
This change comes after the state of California introduced the Assembly Bill 5 (AB5) law, which classifies individuals previously considered contract workers as employees. In an effort to keep drivers categorized as contract workers, Uber has introduced a new fare-setting system that allows them to pass the “ABC test” set by Bill AB5.
As of Jan. 22, drivers in Palm Springs, Sacramento and Santa Barbara are testing a new fare-setting system on airport pickups. According to The Verge, Uber reportedly wants to test this new pricing approach in smaller cities before deciding whether to roll it out statewide and to larger cities, like Los Angeles.
Drivers will be able to increase ride prices in 10% increments, up to five times the fare originally set by Uber. Essentially, this creates a bidding system where the drivers willing to drive for the lowest price will be matched with riders first, whereas those who are charging higher prices will be matched as demand increases.
Another change impacting riders in the test California locations is that fares listed when you request a ride are a range, not an exact number.
In addition to the fare-setting change, Uber has made some changes for California drivers. For one, drivers will now be able to see trip request information, such as pickup, trip time, distance and destination, prior to accepting the ride. This change allows drivers to see what they can expect to earn from the ride. Based on that, drivers can reject rides without penalty but that could make it more difficult to get a ride.
Passengers will also be able to add drivers to a list of “favorites,” which gives them priority when it comes to future ride reservations. Unfortunately, with the new fare system comes the loss of Uber Rewards benefits, such as price protections on certain routes and flexible cancellations.
Related: The best credit cards for Uber
Why did these changes happen?
The purpose of the bill that contributed to these changes was to give contract employees, like Uber drivers, increased protections like minimum wage, sick days, workers’ compensations and unemployment benefits. Uber’s goal is to continue to help connect riders and drivers, thus, keeping drivers as independent contractors.
In order to avoid the new AB5 law that would require Uber to pay workers significantly more in benefits, it has to pass the “ABC test,” which dictates that the individual is:
- Free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and, in fact,
- The worker performs work that is outside the usual course of the hiring entity’s business
- The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity
Uber’s new fare-setting system allows the company to comply with the new law by giving drivers more independence. Uber has expressed concerns about the new bill. “AB5 threatens to restrict or eliminate opportunities for independent workers across a wide spectrum of industries,” said an Uber spokesperson in an emailed statement.
For more TPG news delivered each morning to your inbox, sign up for our free daily newsletter.
Uber‘s new fare-setting system is still in the experimental phase in select cities. Time will tell what the service’s long-term approach will be to comply with this law.
Are you located in any of these three testing areas? We’d love to hear your thoughts about the new changes.
Featured photo by shutter_o/Shutterstock.
Welcome to The Points Guy!
WELCOME OFFER: 80,000 Points
TPG'S BONUS VALUATION*: $1,600
CARD HIGHLIGHTS: 3X points on dining and 2x points on travel, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®.
- Enjoy benefits such as a $50 annual Ultimate Rewards Hotel Credit, 5x on travel purchased through Chase Ultimate Rewards®, 3x on dining and 2x on all other travel purchases, plus more.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
- With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories
- Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.