Uber Technologies on Wednesday informed its California customers that it will switch to providing estimates as opposed to fixed prices for its rides in response to a new state law that makes it harder to qualify its drivers as contractors, Reuters reports.
In an email sent out to riders, the ride-hailing services firm said the final price would now be calculated at the end of a trip, “based on the actual time and distance traveled,” the report said.
“Due to a new state law, we are making some changes to help ensure that Uber remains a dependable source of flexible work for California drivers,” Uber was quoted as saying in the email.
The change applies to all private rides, while upfront prices will continue to be provided for shared, or pooled rides.
In a blog post on Wednesday, Uber said the step was the result of changes to its fare structure, with drivers still getting paid per mile and minute, but the company now taking a fixed 25 percent cut from drivers. That service fee previously fluctuated.
The company, meanwhile, told customers that it discontinued some of its reward benefits for frequent riders.
Uber hopes the changes will bolster its argument that it is merely a technology platform connecting riders with drivers, not a transportation company, Reuters noted.
The California law, which went into effect on Jan. 1, strikes at the heart of the “gig economy” business model by making it harder for companies to qualify their workers as contractors rather than employees.?
By classifying contractors as employees, technology companies like Uber, Lyft, DoorDash and Postmates would be subject to labor laws that require higher pay and other benefits, such as medical insurance.
Uber and Postmates, a courier services provider, in a lawsuit in late December asked a US court to block the law.
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