Uber Inadvertently Underpaid New York City Drivers for Over 2 Years

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By Reuters | Updated: 24 May 2017 09:57 IST
Highlights
  • Uber admitted underpaying its drivers for two-and-a-half years in US
  • Uber usually takes a 25 percent commission from US drivers
  • It could pay drivers back at least $45 million, at about $900 per driver

Uber Technologies Inc said on Tuesday it underpaid its New York City drivers for the past two-and-a-half years, an error that could cost the ride-hailing company tens of millions of dollars.

Uber generally takes a commission from its drivers after deducting taxes and some fees, but it instead took a higher percentage from its New York City drivers using the full fare before accounting for sales taxes and fees, according to the Wall Street Journal, which first reported the news.

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Uber usually takes a 25 percent commission from US drivers under a November 2014 nationwide driver agreement, the report said.

The company could pay drivers back at least $45 million (roughly Rs. 292 crores), averaging at about $900 (roughly Rs. 58,940) per driver, the Journal reported.

"We are committed to paying every driver every penny they are owed - plus interest - as quickly as possible," Rachel Holt, Uber's regional general manager for US and Canada, said via email.

All New York City drivers under the 2014 agreement would be eligible for a refund, regardless of whether they are still active or not, as long as they completed an Uber ride, the Journal report said.

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The Independent Drivers Guild, which represents 50,000 drivers in New York City, on Tuesday called on regulators to investigate the payments practices of Uber and other ride-hailing apps.

The guild, in a statement, also called for an investigation into Uber's use of the "upfront pricing" feature, which guarantees customers a certain fare before they book a ride.

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Drivers have complained that the feature short-changes them while Uber gets the difference, the guild, which was set up last year with Uber's help, said.

In January, Uber agreed to pay $20 million to settle claims by the US government that it exaggerated prospective earnings in seeking to recruit drivers and that it downplayed the costs of buying or leasing a car.

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Uber has been hit with a number of setbacks lately, including accusations of sexual harassment from a former female employee and a video showing Chief Executive Travis Kalanick harshly berating an Uber driver.

© Thomson Reuters 2017

 

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Further reading: Uber, Uber Cabs, Apps, Transportation, US
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