Unpaid Commissions

In an apparent effort to boost profits and appease shareholders, last year Uber Technologies introduced “upfront pricing” to show riders the cost of a trip before they book it. While the price may be upfront to riders, drivers have been kept in the dark about their commissions on these fares, with allegations that the carpooling service is unlawfully denying drivers compensation in violation of wage and hour laws.

What Is “Route-Based Pricing”?

Uber admitted to Bloomberg News that it has been using artificial intelligence and algorithms to determine what riders would be willing to pay for a certain trip, which in some instances causes them to be charged more than the usual cost of a trip. Called “route-based pricing,” the company began doing this last year when it launched its “upfront pricing” scheme, which shows riders the price of their trip before they book it. The new system is a departure from prior calculations that set fares by a combination of distance, time, and geographic demand. In some cases, a rider may be charged more than the usual cost of the trip.

Wage Theft from Reduced Driver Commissions

The problem is that Uber has not, to this point, shown the driver when a rider has accepted a higher fare than usual for a certain route. Until now, Uber has compensated drivers based on a reduced fare and quietly pocketed the difference – with many drivers none the wiser. Some drivers claim that the company intentionally designed the software to utilize a longer route to increase the price that passengers pay for the fare.

In the Bloomberg story, Uber said it plans to start showing drivers the price a passenger pays for a ride. However, the company has also said it will stop indicating what percentage it took from the fare before giving the driver his or her commission.

Other Uber Wage Abuse Claims

This is yet another example of potential wage theft by Uber. Earlier this year, the rideshare giant acknowledged it had underpaid drivers in New York and Philadelphia by tens of millions of dollars, and other claims have been made that the company misclassified drivers as independent contractors rather than employees to avoid wage and overtime obligations.

Uber is a very successful company, but may be ignoring the fact that its success comes from its drivers, who appear to not be receiving their fair share.

The ride-sharing giant, Uber, announced in May that the company had “mistakenly underpaid” its New York City drivers for two-and-a-half years – a purported error that has denied its drivers tens of millions of dollars in unpaid fees.

How Does Uber Calculate Drivers’ Commissions?

Uber’s 2014 nationwide driver agreement stipulates that it charges drivers a commission of around 25% of each fare after taxes and fees are deducted. For its New York City drivers, however, Uber was calculating the commission on the entire fare paid by the rider – without first deducting sales tax and the city’s injury-compensation fund fee. It’s a substantial miscalculation that left drivers holding the bag.

To make amends, the company said it would refund the money, plus interest, with each driver receiving an average of $900. Any driver completing a trip since signing the 2014 agreement with Uber is eligible for the refund.

Uber’s Recurring Wage Abuses

While Uber’s May announcement gave the impression it had just discovered the problem, that may not be the case. Earlier this year, the company admitted to doing the same thing to Philadelphia drivers.

There is also a recent troubling report that suggests Uber was aware of the problem in New York as far back as 2015, along with New York State regulators. According to the New York Times, changes Uber made to its driver contract in 2015 indicate it was aware of the problem and has been trying to address it since.

The issue is not entirely settled in New York City, either. Some Uber drivers feel the company has not fully repaid them, and have filed a class action lawsuit seeking full payment for what they are owed.

All of this raises troubling questions about whether Uber is paying drivers what they are rightfully owed, and whether or not the company is admitting how big the problem is – and how far back it goes.