Why Uber Owes $900 on Average to Every New York City Driver
Yet another Uber scandal.
On Tuesday, Uber announced that it has been accidentally shortchanging its New York City drivers by millions of dollars over the past two and a half years. The ride-hailing company’s forthcoming payout will mark the second major settlement given to its employees this year.
Uber withdraws a 25 percent commission from the fares earned by its drivers. This cut is supposed to be taken out after taxes and fees have been deducted, but Uber has been taking the cut beforehand, meaning that the company has gotten a bigger share from drivers’ earnings than is allowed.
This is a pretty basic and strange accounting mistake. The Wall Street Journal calls the error “striking,” especially since Uber’s business model “hinges on complex mathematical formulas that match drivers with riders and that crunch fares by the millisecond based on traffic, demand and other factors.”
The New York City taxes and fees ignored by Uber are a sales tax and injury compensation fund. Uber intends to pay back drivers for the withheld payment, plus interest; on average, the company owes each driver around $900.
Uber drivers protest fare cuts in NYC in February 2016.
“We made a mistake and we are committed to making it right by paying every driver every penny they are owed, plus interest, as quickly as possible,” said Uber regional general manager Rachel Holt in a statement. “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.”
It’s only five months into 2017, and Uber’s list of blunders this year is already staggering, including shady methods to get drivers to work long hours, a high-profile argument between a driver and Uber’s CEO, a botched response to the immigration ban that caused a huge boycott, and more. If you can no longer take Uber’s nonsense, there’s always Gett, Waze, Juno, or a taxi.
