Uber allowing drivers to set their own fare rates in parts of California to beat employees decision

Uber is now letting drivers in Southern California and Sacramento set their own fares, as the ride-sharing firm attempts to prove drivers should not be classified as employees following California’s new AB5 gig-work law.

The new AB5 law is a piece of legislation signed into law by Governor Gavin Newsom in September 2019, and which came into effect on 1 January 2020. It required companies that hire independent contractors to reclassify them as employees, with a few exceptions.

The bill expanded on a ruling made in a case that reached the California Supreme Court in 2018, Dynamex Operations West, Inc. vs. Superior Court of Los Angeles, and is designed to regulate companies such as Uber, Lyft and DoorDash.

In the 2018 Dynamex case, the California Supreme Court ruled that companies must use a three-pronged test in determining whether to classify workers as employees or independent contractors. This test assumes that workers are employees unless the company that hires them can prove the following three things:

1. The worker is free to perform services without the control or direction of the company.

2. The worker is performing work tasks that are outside the usual course of the company’s business activities.

3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

This test holds companies to a higher standard in proving workers are independent contractors than was previously used in California. AB5 makes this test the new gold standard requirement for companies that hire workers in the state of California.

Uber drivers in Los Angeles, Bakersfield, San Diego, Fresno and surrounding areas can now set fare prices 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.

Image credit: TaxiPoint