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

Jan 12, 2020

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.

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.

Sign with logo at the headquarters of car-sharing technology company Uber in the South of Market (SoMa) neighborhood of San Francisco, California, with red vehicle visible in the background parked on Market Street, October 13, 2017. SoMa is known for having one of the highest concentrations of technology companies and startups of any region worldwide. (Photo by Smith Collection/Gado/Getty Images)
(Photo by Smith Collection/Gado/Getty Images.)

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

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.

Featured photo by Ali Balikci/Anadolu Agency/Getty Images.

Chase Sapphire Preferred® Card

WELCOME OFFER: 60,000 Points

TPG'S BONUS VALUATION*: $1,200

CARD HIGHLIGHTS: 2X points on all travel and dining, 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.

Apply Now
More Things to Know
  • Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
  • 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 60,000 points are worth $750 toward travel
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Earn 5X points on Lyft rides through March 2022. That’s 3X points in addition to the 2X points you already earn on travel.
Intro APR on Purchases
N/A
Regular APR
17.49% - 24.49% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.