Uber underpaid drivers in New York for more than two years

May 23, 2017, 3:50pm

Uber drivers have long been suspicious of and frustrated with the ride-hailing service, as it has variously subsidized, raised, and slashed driver pay over the past few years.

The company’s latest revelation all but ensures drivers’ attitudes won’t change anytime soon.

On Tuesday, Uber said it had accidentally underpaid drivers in the New York area for more than two years, adding that it will pay back those affected to the tune of about $900 each.


The Independent Drivers Guild, a quasi-union entity recognized by Uber as a representative of its 50,000 New York drivers, estimated the total payout will cost Uber $45 million. (The ride-hailing company has raised nearly $9 billion in equity funding.) Jim Conigliaro Jr., a founder of the guild, called the error “theft” and said in a statement that Uber has “a long history of underhanded tactics.”

Rachel Holt, Uber’s North American operations chief, focused instead on what she characterized as the company’s attempts to change.

“We are committed to paying every driver every penny they are owed — plus interest — as quickly as possible,” she said 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.”

Last August, a federal judge rejected a $100 million settlement between Uber and its drivers over employment status, amounting to a mixed result for both sides. The company continues to fight similar new lawsuits.

One of Uber’s biggest expenses is the cost of marketing campaigns to attract drivers, a budget item that the Information reports amounted to $1 billion in 2015 and possibly $2 billion in 2016. The driver pay error, and a number of other Uber practices that have infuriated drivers, could add to that expense going forward.

The company frequently changes how it pays drivers, and as it did with a change to how it calculated pricing and pay that was reported by Bloomberg last week, Uber tends to explain changes only after they’re implemented. A video published by Bloomberg in February shows Uber CEO Travis Kalanick telling a driver complaining about fare cuts that “some people don’t like to take responsibility for their own shit.”

In January, Uber was fined $20 million by the Federal Trade Commission for misrepresenting how much drivers had the potential to earn. While Uber’s Craigslist ads said drivers in San Francisco and New York could make between $74,000 and $80,000 a year, fewer than 10 percent of drivers in those markets actually earned that much.

Uber can ill-afford another crisis. In addition to its long-running dispute with drivers and regulators, the company in February hired former U.S. Attorney General Eric Holder to investigate its workplace culture in the wake of a departing employee’s allegations of serial sexual harassment. Multiple senior executives at the company have stepped down since, and more heads are expected to roll.

Uber is also struggling to battle a lawsuit from Waymo, the self-driving car unit of Google’s parent company, Alphabet. Waymo alleges that in 2016, its former engineer Anthony Levandowski stole proprietary research data before leaving Waymo, launched his own startup, and sold the startup to Uber — all within a span of a few months.