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By Tina Bellon
NEW YORK (Reuters) – Uber Technologies (NYSE:) Inc on Wednesday informed its California customers that it would switch to providing estimates as opposed to fixed prices for its rides in response to a new law that makes it harder to qualify its drivers as contractors.
In an email sent out to riders and seen by Reuters the company said the final price would now be calculated at the end of a trip, “based on the actual time and distance traveled.”
“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,” the company said in the email.
The change applies to all private rides, while upfront prices will continue to be provided for shared, or pooled rides.
The email included a picture displaying an example of a ride request on the Uber app. It showed a $27 to $36 range for an UberX ride, the company’s most popular private ride option.
Uber did not immediately respond to a request for comment on how the legal changes to the status of California contractors are related to its pricing calculations.
The California law 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 went into effect on Jan 1.
By classifying contractors as employees, technology companies like Uber, Lyft Inc (NASDAQ:), DoorDash and Postmates Inc 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 have asked a U.S. court to block the law.
Uber has repeatedly said the law does not apply to its workers, who it argues are properly qualified as independent contractors.
Nevertheless, the company has made changes to its driver app in recent weeks, with California drivers now being able to see more information ahead of accepting a trip, including the ride’s likely fare, length and destination.
Those changes were made in response to the California law and feedback from drivers, the company said on its website.
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