Uber Owes $45M in Back Pay to NYC Drivers
Uber has long promised Big Apple drivers they can "cash in on the action" of ridesharing. And just months after settling a lawsuit over allegations of misleading claims about how much drivers could earn, Uber is now admitting it mischarged its drivers for years, to the tune of about $900 per driver.
And with some 50,000 drivers in New York City, that could mean Uber owes underpaid drivers around $45 million in back pay.
Timing Is Everything
The source of Uber's wage theft appears to be when the ridesharing company took its cut of drivers' fares. Instead of taking it out after taxes and fees -- as stated in the company's terms of service -- Uber was calculating its cut based on the pretax amount of the fare.
Under New York state laws and tax regulations, sales taxes for rides and contributions to a drivers' fund for workers' compensation and death benefits are supposed to be paid by passengers. So Uber should be assessing these on top of the fare price, but the company is being accused of deducting the amount from the drivers' portion instead. Uber has also repaid Philadelphia-based drivers after similar mischarging accusations.
Scot-Free Fee
According to the Taxi Workers Alliance's executive director Bhairavi Desai, the amount Uber really owes drivers may be hundreds of millions more:
"While we welcome progress in Uber acknowledging its unlawful deductions, make no mistake: the full amount that they owe to drivers is much more than what it is now claiming ...Uber hasn't just wrongly calculated its commission, it has been unlawfully taking the cost of sales tax and an injured worker surcharge right out of driver pay as opposed to charging it on top of the fare as the law requires."
And an analysis by the New York Times seems to confirm Desai's statement:
Uber has dispatched more than 125 million rides in New York City since the beginning of 2015, according to data from the Taxi and Limousine Commission. If the average fare on those trips is at least $15, which appears to be the case, and Uber deducted the charges from drivers on each trip, the amount of the improper deductions would be more than $200 million.
Uber claims the miscalculations were an accidental oversight, but the Times contends "Uber is well versed in the ins and outs of the sales tax, having lobbied the State Legislature to roll it back."
Related Resources:
- Whiny Babies Uber and Lyft Take Their App and Leave Austin (FindLaw's Free Enterprise)
- Uber's Terrible, Horrible, No Good, Very Bad 2 Weeks (FindLaw's Free Enterprise)
- NYC Wage Theft Protections for Freelancers (FindLaw's Free Enterprise)
- When to Fire an Employee at the Center of a Social Media Scandal (FindLaw's Free Enterprise)