Uber drivers who pick up passengers at airports in Santa Barbara, Sacramento, and Palm Springs, California, now have a power they never had before: They'll be able to set a fare of their choosing, up to five times Uber's set price for the trip. The company is reportedly testing this new arrangement in smaller cities before rolling it out to other, larger cities or throughout the state. Beginning next week, drivers at these airports will also be able to set fares lower than Uber's set fare, as little as a 10th of that fare if they choose. They'll also be able to opt out of "surge" pricing, which automatically raises fares when there is high demand and few drivers are available.
The changes come in response to California's new law, AB-5, which took effect January 1 and puts stringent rules in place for companies who define some of the people who work for them as contractors rather than employees. Uber, like Lyft, DoorDash, and pretty much all other rideshare or delivery services, treats drivers as contractors. Under the new law, companies that define people as contractors rather than employees must now meet a three-part test to do so legally, and the first requirement is that a contractor must be in control of his or her own work and working conditions.
With that in mind, Uber has already made changes to allow its California drivers to see the destination of a trip (rather than just the starting point) before accepting it. It's also given them the right to reject trips without penalty, and it's given passengers the ability to request individual drivers that they prefer. And riders in California are no longer given a set fare when they hire an Uber. Instead, they're given a range of fares, with the final number taking into account both the duration and distance of the trip. Experts say these changes will help Uber make the argument that its drivers aren't really employees.
A bidding war is coming
Once the new airport test pricing is fully in place, Uber drivers will, for the first time, be bidding against other Uber drivers for rides. According to a Wall Street Journal report, Uber's algorithms will automatically match riders with the lowest-priced available driver for their trips. This means drivers will need to strike a delicate balance between setting their fares too low and earning too little per trip, and setting their fares too high and having to wait a long time to get a passenger. Unless, of course, they band together to keep fares high, something that Uber drivers have already started doing at Reagan National Airport near Washington, D.C.
But, if you think about it, perhaps the most surprising thing about this new pricing scheme is the very fact that it's new. Uber has consistently stated that it is not a company that provides rides, but one that connects riders with drivers. If that's the case -- if Uber's main function is to play matchmaker between drivers and passengers -- why is it setting prices at all? Shouldn't every Uber driver have the ability to set his or her own rates?
According to Melissa Berry, writing in the popular blog the Rideshare Guy, drivers have been complaining about their inability to set their own fares for a long time now, and "apparently Uber is listening." That's great, but the company really should roll out these changes not just to all of California, but to all its U.S. drivers, and perhaps drivers in other nations as well. In fact, it should have had them in place from the beginning. As Berry writes, "being able to set your own prices is an important part of being a true independent contractor."