Uber owes its New York City drivers tens of millions of dollars after having admitted to taking extra commissions from pre-tax fares, reported The New York Times. The company on Tuesday revealed the malpractice and said that they would pay the drivers their dues soon. The Wall Street Journal was the first to report this.
The company is supposed to take a commission of between 20% and 25% of the fare after deducting state taxes, reported The Guardian. Instead, they had been taking their cut from the gross fare, which means that the burden of taxes was transferred on to the drivers while the company made money.
An Uber spokesperson said drivers in New York would get about $900 each as a refund for the mistake. The company also said that they had discovered the problem while testing a new pricing scheme.
“We are committed to paying every driver every penny they are owed – plus interest – as quickly as possible,” Rachel Holt, Uber’s regional general manager for the US and Canada, said in a statement. “We are working hard to regain driver trust, and that means being transparent, sticking to our word, and making the Uber experience better from end to end.”
However, the New York Taxi Workers Alliance is not convinced of Uber’s intentions. “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,” said Bhairavi Desai, the executive director of the NYTWA. “This payout is an attempt by Uber to pull a fast one to avoid court oversight and shortchange drivers in the process. Nice try. We’ll see you in court to win back all of the money drivers are owed, includ[ing] up to double damages.”
In June 2016, the New York Taxi Workers Alliance had filed a class-action suit against the company. The petitioners held that the company’s policy to deduct the sales tax and the injured driver fee from a pre-tax amount amounted to wage theft, reported The Guardian. The case was filed in a New York federal court.
This is not the firsttime that Uber has admitted underpaying its drivers in the Unites States. In March, the company confessed to taking 5% extra commission from its Philadelphia drivers for 18 months, and refunded the money. The company also spent $20 million in settlements in connection with a suit filed by the Federal Trade Commission that accused Uber of tricking drivers with false promises of higher earnings.
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