Uber allows Californian drivers to set their own rates
In California, the new Uber pricing system started on 9 July, allowing drivers to establish their own rates as a function of the company’s price multiplier. The system was tested in January in Sacramento, Santa Barbara, and Palm Springs. Drivers previously did not have the possibility of setting their own rates, which was one of the main arguments when considering drivers as employees rather than independent contractors. When the flexible rates were tested in January, drivers reported receiving lower overall wages because riders could choose drivers with lower rates. Scholars think that flexible pricing will lead to a race to the bottom. Under the recently passed statute AB5, drivers would be considered employees and eligible for benefits such as minimum wage, unemployment insurance, overtime and unionisation rights. The pricing flexibility is a move in response to AB5.