There seems to be no end to Uber’s controversies. Uber has now admitted that its app miscalculated the cut for drivers and shortchanged them for two and a half years. The app calculated commissions for Uber on a pre-tax sum, whereas its terms of service stipulate calculating it after taxes are deducted.
As per a Bloomberg report, it will now pay out an average of $900 per driver in restitution, costing the company tens of millions of dollars.
Based on the 50,000 drivers in New York City – as per the Independent Drivers Guild – the back pay could run up to at least $45 million
This is not the first time Uber has misled drivers about the income they could earn and miscalculated fares. However, in the current case, Uber was taking its part of the fare based on the pretax sum, instead of after taxes and fees as stated in its terms of service.
This issue was also raised in a lawsuit filed against Uber by the New York Taxi Workers Alliance. In March, Uber acknowledged that it underestimated drivers’ pay in Philadelphia by millions of dollars.
In a statement Uber said that it will pay every driver, every penny he is owed, plus interest as quickly as possible. “We are working hard to regain driver trust, and that means being transparent, sticking to our word, and making the Uber experience better from end to end,” said Rachel Holt, Uber’s head of US operations.
The Independent Drivers Guild called on regulators to investigate Uber’s payment practices. “Uber’s theft of drivers’ hard-earned wages is the latest in a long history of underhanded tactics in this industry,” Jim Conigliaro Jr., founder of the guild told Bloomberg.
Uber recently updated its terms of service for drivers. While drivers’ pay is determined according to the time and distance they travel, Uber has begun to experiment with how it calculates the price for riders.
The Taxi Workers Alliance say that the amount Uber is paying back isn’t the entire amount it owes drivers.
"While we welcome progress in Uber acknowledging its unlawful deductions, make no mistake: the full amount that they owe to drivers is much more than what it is now claiming," Bhairavi Desai, the Taxi Workers Alliance’s executive director, said in a statement.
"Uber hasn’t just wrongly calculated its commission, it has been unlawfully taking the cost of sales tax and an injured worker surcharge right out of driver pay as opposed to charging it on top of the fare as the law requires,” Bhairavi added.
Last week, it admitted for the first time publicly that it was experimenting with a new pricing strategy where it charges passengers based on their collective willingness to pay and not based on the distance or length of the trip.