New California law allows some Uber drivers to set own rates

A new California state law is requiring more gig companies to convert their workers to regular employees which will mean offering them benefits and more  protections.

A gig company is any business that has a formal agreement with temporary workers, online platform workers, on-call workers, contract firm workers or independent contractors such as ride-share companies like Uber, Lyft, or handy man service companies like TaskRabbit or food delivery services like PostMates.

These gig companies argue that the new law could ruin their business model and do away with the flexibility that is core to the gig economy.

Currently Uber is testing a new system at the Palm Springs, Sacramento and Santa Barbara airports that allows their contract ride-share drivers to increase their fare rates in 10% increments and even up to five times more than the base rate. Then when riders request for ride-share they are connected with drivers offering the lowest rate. Riders are not told what the base rate is though.

Uber says that it will also allow their drivers to lower their fare prices below the base rate in the days to come and opt out of the increase in pricing. This is Uber’s effort to allow their drivers more control and strengthen their argument that their drivers a really contractors rather than company employees.

Uber’s fare pricing experiment could have unexpected aftereffects the company acknowledges.

Daniel Danker, who is the head of driver product at Uber, says that the fluctuating fare pricing increases may create a more unstable, unpredictable climate for riders who generally expect a certain level of consistency in prices, while on the other hand it may most likely create some meaningful complexity to the driver’s earnings experience as it gives them more control over how they earn it.

There’s some confusion and misinterpretations between riders and drivers.

Travelers returning from trips at the Sacramento International Airport like Nar Bustamante, say they are aware of the new ride-share pricing experiment but are unsure as to what the normal rate is in order for them to compare.

Drivers on the other hand are split as far as using the new feature. 

Some drivers have increased their ride-share pricing by just a little and are benefitting, but other drivers who are increasing their rates by 50% are not.

Gig companies are negotiating with the state in order to seek relief from this new labor law, but efforts such as that being employed by Uber may not be enough, says Francis J. Mootz III, who is a professor of law at McGeorge School of Law in Sacramento.