Uber Rolls Out Major Changes in California

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Uber Technologies Inc. (UBER) - Get Report unveiled major changes to its ride hailing app in California on Wednesday. These changes are in response to a new law that went into effect on January 1, 2020 aimed at protecting employees rights. 

Uber explained these changes to customers and drivers in an email and blog post. The most significant change comes for prospective private UberX riders-the app's most popular service. Riders will now see only an estimated price range of their requested trip. These estimates will be based on driving time and distance, rather than a set price. Customers using the shared ride option will still receive an upfront fare.

The law in question, Assembly Bill 5, extends a 2018 California Supreme Court decision that laid out rules for classifying workers as contractors. It requires that contract work be “outside the usual course of the hiring entity’s business.” The law primarily hits contract workers like drivers and delivery folks, but it also applies to other contract workers like truck drivers and and freelance journalists. 

In December of 2019, Uber along with delivery service Postmates sued the state of California over the law claiming it is unconstitutional. They argue that they are a technology company and not a transportation company, hence their ability to classify drivers as independent contractors. These changes are meant to give drivers more choice about which rides they accept, making them appear more independent in the eyes of the law.

Lyft (LYFT) - Get Report, Ubers main competitor, has yet to make any changes to their service and has given no indication of plans to do so. 

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