Ride hailing firm Uber has announced that it will increase its prices for rides and food deliveries to cover new benefits for California workers under Prop 22.
The increase in Uber prices comes following the passage of Proposition 22, or Prop 22 in California last November, which exempts companies such as Uber from classifying their gig workers in the state as employees but will have to provide them benefits such as workers' compensation, unemployment insurance, family leave, or sick leave.
Price hike and new driver benefits
According to Uber, the new flat fees, which will range from $0.30 to $2 based on service and location, was implemented starting Monday.
Under Prop 22, Uber's drivers and delivery workers will remain as independent contractors but will receive benefit concessions, including a minimum earnings guarantee based on "engaged time," or the amount of time a driver spends in fulfilling a ride or delivery request, but will exclude time spent waiting for a gig.
The company informed its drivers about the changes via a blog post and email, which says: "If you earn less than the guaranteed minimum over 2 weeks, we'll pay you the difference automatically."
Drivers will also receive $0.30 reimbursement per engaged mile, which was lower than the IRS' estimated $0.58 per mile cost of owning and operating a vehicle. They will also be enrolled in an injury protection plan starting this week.
Additionally, those who are able to put in 15 on-trip hours weekly will be entitled to a stipend for healthcare.
In order to cover these new costs, Uber sad its customers will pay a "California Driver Benefits Fee" which will be different per city, and service, with rides costing $0.30 to $1.50 more while food deliveries via Uber Eats will have an additional $0.99 to $2 per order.
California's Proposition 22
Ride-hailing companies Uber and Lyft secured a significant win after their ballot measure, called Proposition 22, was passed in California, allowing them to maintain the status of drivers as independent contractors. However, they will still need to address the issue on a national scale.
Prior to the favorable vote garnered by Prop 22, California courts ordered both Uber and Lyft to reclassify their drivers in the state as employees, in accordance to the state’s AB-5 law.
The law, which took effect on January 1, states that companies must prove workers are free from company control and perform work outside the usual course of the company’s business in order to classify workers as independent contractors rather than employees.
In August, San Francisco Superior Court judge Ethan Schulman ruled that Uber and Lyft should reclassify their California drivers from their current status of independent contractors to employees.
The court ruling stated: "Now, when Defendant’s ridership is at an all-time low, may be the best time (or the least worst time) for Defendants to change their business practices to conform to California law without causing widespread adverse effects on their drivers."
In October, the California appeals court ruled to reaffirm this decision, issuing a similar order to Uber and Lyft.
In his decision, Associate Justice Jon Streeter wrote: "It is broad in scope, no doubt, but so too is the scale of the alleged violations." He upheld the injunction restraining the companies from classifying their drivers as independent contractors.
