Uber rolls out changes to California ride-hailing in wake of new law
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Uber is rolling out a number of changes to its ride-hailing service in California due to a new state law with stricter requirements to classify a worker as an independent contractor, according to a new customer email.
Why it matters: Uber has said it doesn't believe the law will force it to reclassify drivers because its core business is technology, not transportation, but it's unsurprising the company is taking steps to give (in practice and appearance) more autonomy to its drivers to protect itself.
- Pricing: Passengers will now be given an estimated range for a non-carpool trip instead of an upfront, set price. Uber (and rival Lyft) previously worked this way up through 2016 when both companies rolled out a current "upfront pricing" model that effectively decoupled what the rider pays from what the driver earns.
- Picking drivers: Drivers who receive a five-star rating will be given priority to accept passenger requests, while those who receive one star will not be matched with that rider.
- Rewards: Uber is discontinuing some of the features of its rewards program for riders, including "price protection" for certain routes (presumably their usual commute or rides to frequent destinations).
Uber is also making some changes on the driver side, including a 25% cap on the commission they pay to Uber, and how "surge pricing" (increased prices during high-demand times) is calculated. Similar changes will roll out for its food delivery business too.
The bottom line: Over the years, Uber made a number of changes to its ride-hailing service to juice up its revenue and margins — but many of those have been criticized by drivers for making the business less transparent and putting workers at the mercy of the company's whims.
Editor's note: The story has been updated to clarify the company's past comments about the law.