Uber no longer providing riders with upfront fixed prices in California due to new law

Ride-hailing service Uber has made significant changes to the way it operates in California in response to the state's new Assembly Bill 5 (AB5) law.

On Jan. 8, in emails to riders and drivers, Uber detailed the updates to its pricing and payment platform. Most significantly for riders, UberX fares will no longer be stated upfront; instead, passengers will see an estimated price range for the trip. UberPool (shared) trips will still show upfront pricing.

For more TPG news delivered each morning to your inbox, sign up for our daily newsletter.

As reported by Marketwatch, the changes are meant to prevent drivers from being reclassified as employees rather than independent contractors. Under California's new law, which took effect Jan. 1, 2020, many workers who were previously contractors are now considered employees. This gives them increased protections, including a minimum wage, sick days, workers' compensation and unemployment benefits.

To keep workers classified as independent contractors, a company must meet the following conditions:

• The worker 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

Daily Newsletter

Reward your inbox with the TPG Daily newsletter

Join over 700,000 readers for breaking news, in-depth guides and exclusive deals from TPG’s experts

Email address

Sign up

By signing up, you will receive newsletters and promotional content and agree to our Terms of Use and acknowledge the data practices in our Privacy Policy. You may unsubscribe at any time.

In a blog post to drivers, Uber says:

But we’ve also heard from you that we can do more to improve the experience for Drivers so you can reap the full independence that the platform can provide. So starting today, you’ll see more information upfront that will help you earn on your own terms. We’ll also add new features to help you build your business on our platform. And in the coming months, we will also make the fare structure more straightforward so it’s clear where your earnings and fees come from.

Related: Here's what Uber says it's doing to make your next ride safer

Uber has made numerous changes for drivers, including the ability see key details, including pickup, trip time, distance, destination and fare before accepting a trip. In addition, drivers can now reject a trip without penalty — which could make it more difficult for riders to find a driver for short, relatively unprofitable trips. Uber's blog reminds drivers that "rejecting requests for discriminatory reasons, including rejecting trips solely to avoid particular neighborhoods, violates Uber’s Community Guidelines and California law."

The company will now cap its commission at 25% for UberX rides (28% for UberXL, Comfort, SUV and Lux trips), and trip surge rates will now be shown as a multiple of the standard fare rather than a dollar amount. Additionally, Uber has created more ways for drivers and riders to interact with each other, including giving riders the ability to "favorite" a driver and request them for future rides.

Related: The best credit cards for Uber

Uber says the new features are available in California only, but "will monitor the effects of the change to ensure the experience is working properly and doesn’t create any unintended issues for drivers or riders. We will continue to evaluate expanding these features beyond California in the future."

All of these updates aim to fulfill independent contractor criteria established by the new law. These changes have Uber framing itself as a technology platform rather than a ride-hailing service and gives drivers more control over their job. Unfortunately, that means less pricing transparency for riders.