Uber is letting drivers in Southern California and Sacramento set their own fares, a feature it will soon bring to the Bay Area and the entire state.
It’s part of the San Francisco ride-hailing company’s attempts to show that drivers are independent, and therefore should not be classified as employees under AB5, California’s new gig-work law. AB5 makes it harder for companies to claim that workers are independent contractors, the business model that Uber relies on.
Uber drivers in Los Angeles, Bakersfield, San Diego, Fresno and surrounding areas now can set trip fares as a multiplier of Uber’s existing time and distance rates. They can charge as little as half the standard fare and as much as five times the standard. Those choices come in increments of 10%, so a driver could charge 30% above the regular fare, for instance. They also can stick with Uber’s default rates.
Uber said it will expand the name-your-price regime to the San Francisco region in the coming weeks.
“I do think this helps Uber’s case (that drivers have some independence), but it will be tough for Uber to ever allow drivers to fully operate as independent contractors,” said Harry Campbell, who runs The RideShare guy blog and podcast. “Drivers would agree that Uber’s had too much control over these years.”
Giving more control to drivers affects the rider experience too. Riders will be notified when they’re matched with drivers who have adjusted the fare to be higher, similar to the notices they get about surge pricing during times of high demand, Uber said.
“Uber started as an amazing frictionless product: one tap, the driver comes,” Campbell said. “Now you have to do a little bit of work to decide what price you want to pay. The trend is to add complexity and features.”
Campbell and some drivers noted that they lack a way to differentiate themselves.
“Drivers who provide better levels of service will want to charge more, but it’s tough for riders to know that if (they just see) ETA and lowest price,” Campbell said. “I’d like to see Uber add a feature to let drivers highlight their ratings or exemplary service they provide.”
Campbell cited his own experience requesting a ride after the name-your-price feature took effect. On Tuesday he summoned an Uber and was originally quoted a $13 fare, but no driver could be found at that price, so he was matched with a ride for $24, which he rejected, and again with another one for $17, which he also rejected. Eventually he got matched with a driver who was farther away but willing to do the ride for $13.
Drivers say it’s taking some trial and error to see what works — and of course, they are also dealing with drastically reduced demand from passengers who are sheltering at home and fearful of contagion during the coronavirus pandemic.
Currently in the feature’s early stages, “It seems like a lot of drivers are overestimating what passengers are willing to pay,” Campbell said. “Lots of drivers we talk to are charging (two to three times the regular rate) and say, ‘I’m not getting any rides.’ Customers are used to paying certain amounts and are very price sensitive.”
He thinks drivers who set subtler increases, perhaps 20% higher, will be most likely to benefit.
Uber started experimenting with drivers setting fares at small airports in Santa Barbara, Sacramento and Palm Springs in January. That month it made other changes to bolster its arguments that AB5 doesn’t apply to it, such as letting drivers see ride destinations up front, letting them reject rides without penalties, and letting riders select favorite drivers who’d be matched with them on future trips.
Uber and rival Lyft are battling driver reclassification on multiple fronts: in the courts, where California has sued them; with their state regulator, the California Public Utilities Commission; and via a November ballot initiative they are paying tens of millions to promote. Proposition 22 asks voters to keep gig drivers and couriers as contractors but give them earnings floors and some benefits.