Uber is now allowing some drivers in California to set their own fares to prove the company’s claim that they are freelancers, not Uber employees. The company’s shares rose nearly 7 percent on Tuesday, the biggest gain in nearly five months. It is the latest change the company has made in response to the new labor bill, California Assembly Bill 5, which will take effect on January 1. The bill seeks to reclassify part-time workers as employees with benefits such as sick leave, rather than freelancers.
The Act provides that the burden of proof for classifying an individual as a freelancer falls with the employment entity. Earlier this month, Uber revamped its driver app, removing time-limited prices, removing penalties for refusing to travel and showing how much drivers can make per trip.
Starting Tuesday, santa barbara, Sacramento and Palm Springs airports will be able to increase costs by up to 10 percent, up to five times normal levels. Uber will refine the feature in the coming weeks and, based on the results of the test, could deploy it more widely in the coming months, the person said.
California’s new labor law could disrupt billions of dollars in business built by Uber and other companies using on-demand labor. Uber, Lyft, DoorDash and Postmates are supporting a California vote to repeal the law, promising a minimum hourly wage of $21 and providing some benefits to drivers.
Analysts at Uber and Lyft say the bill poses a life-and-death threat to the business models of the two companies, noting that prices could rise by as much as 30 percent.