Some California drivers are getting a new deal from Uber, but many drivers are skeptical and probably not going to take the company up on it.
The new deal is called “DrivePass” and allows drivers to pay a flat fee that will give them a fee-free deal on a certain number of trips. In other words, Uber will not take out their normal 25% commission on these trips so drivers will earn that much more on every trip.
Drive Pass is now being offered to some California drivers and is apparently being done as an added way to show the state of California that drivers are indeed independent contractors. We’re not sure how it shows that exactly, but Uber says in its message to drivers that, “Drive Pass is another step we’re taking to protect your access to independent work.” (Emphasis added).
Apparently they believe the more often they can say the word “independent” it enhances their argument that drivers are independent contractors rather than employees.
Uber is Eliminating All Other Bonus Programs
Drivers, as always, are skeptical of this program and Uber, as always, has given them reason to be. In their notice to drivers in Sacramento they said, Drive Pass “will replace existing promotions in your city.”
Uber’s driver promotions have always been a risky gamble for drivers, but the risks were generally well-known and drivers knew they had a pretty good shot at meeting the requirements to achieve the bonus.
A typical bonus would work like this: Uber would tell drivers if they complete a certain number of trips within a given period of time they would earn an extra, so many dollars. So they might be told if they complete 25 trips between the hours of 8:00 a.m. and 9:00 p.m. on Thursday that they will be paid a bonus of $50 on top of whatever regular pay they got from the trips. Or, in other words they would earn an extra $2 per trip.
The gamble was whether or not they’d be able to complete the required number of trips. But after having a little experience under their belts drivers could pretty easily estimate whether or not they’d be able to do it.
Drive Pass is Riskier Than Past Bonus Programs
But with Drive Pass, the risk is not only unknown, but it is also unknowable. First, it requires that drivers actually pay Uber a fee for the right to have their commissions waived on the specified number of trips. In one example of this, Uber told drivers they could pay $30 to have Uber’s 25% commission waived on 10 trips.
In order for this to work out for drivers, the total fare for those ten trips would have to average $12 or to put it another way, the combined fares of the ten trips would have to add up to $120 – just for drivers to break even!
Anything less than a $120 total, drivers would actually be paying Uber more in commissions than they would have if they had done nothing. But if the combined fares totaled, say, $150, drivers would earn a mere $7.50 more than they would have normally.
The risk-reward ration seems a little out of whack here. The potential for downside is great while the potential for upside is not that great.
Urban drivers, in cities such as Sacramento do a lot of short trips where the total fare may only come to $7 or $8. They would obviously lose money on all those trips. Plus, who knows whether or not Uber might purposely send short trips to all drivers who have paid into this program? One might think, ‘no, a reputable company would never do that.’ But knowing Uber’s history, that is exactly what they would do. And it would be to their benefit to do it.
On a $7 fare, Uber knows its 25% commission would be $1.75, but if they send that to a Drive Pass driver who has paid $30 for 10 commission-free trips, they’ll earn $3 for that trip! So, why wouldn’t they send the short trips to Drive Pass drivers?
And remember, with Uber’s up-front pricing, where they give passengers the total fare before they finalize their request for a ride, Uber knows exactly how much the fare will be before they send the ride request out to drivers. They could very easily program their computers to send all trips under a certain amount, like $10 – to drivers who are currently using Drive Pass.
Drivers Skeptical
Drivers are skeptical and rightly so. The instant this new program was announced drivers had pounced on it and found all these holes. To them it looks like another desperate attempt on the part of Uber to stop its mounting losses. But because of their skepticism, it is not likely to be much help to Uber’s bottom line.