Rideshare giant Uber is rolling out a new algorithm to determine driver pay in Ontario that critics say is poised to increase costs for consumers while compensating workers less.
The introduction of Uber’s new “upfront offers” approach means driver compensation will rely more on Uber’s AI pricing algorithm as opposed to the current scheme, which solely considers fixed time and distance rates to calculate pay. This model already exists in U.S. and was introduced in British Columbia last month.
The company says the change coming to the province this week is a result of feedback from drivers and is meant to provide “more clarity” about trips, according to an email sent to drivers last Friday.
But some drivers and advocates are concerned about having a robot increasingly control how much they make, saying it can be unpredictable and unfair by compensating them differently for the same work.
The model “opens up that gap between what a customer is charged and what a driver is taking, and increases Uber’s take rate,” said Earla Phillips, a rideshare driver and vice president of advocacy group Rideshare Drivers Association of Ontario.
She worries that Uber is using its algorithm to figure out how to pay drivers the least they’re willing to accept for a ride.
“The gig economy is not (heading in) a good direction,” said Phillips. “It’s destroying our labour landscape and labour rights and destroying people’s lives.”
Uber says Canadian rideshare drivers will be able to see the recommended fare by the algorithm when a rider requests a trip, according to an Oct. 8 addendum to the agreement between Uber and its drivers seen by the Star.
The fares will now be determined based not only on distance and time, but also day of the week, origin and destination, supply and demand, surge amounts and applicable fees.
“This is to better balance the marketplace and help make sure there are enough drivers accepting trips for the number of trips being requested by riders at any given time,” Uber spokesperson Keerthana Rang wrote in a statement to the Star.
What a driver ultimately earns is the price of the fare and applicable fees minus Uber’s service fees and sales taxes.
Uber said the fees it charges drivers will vary per trip based on “market conditions” and other factors. It said it will provide a weekly breakdown of rider payments, fees and earnings.
But Thorben Wieditz, spokesperson for non-profit RideFairTO, contends that “there’s no rhyme or reason behind any of these fares in the future.”
Uber has “figured out, using AI, how to double-dip — how to squeeze drivers and customers at the same time,” he said, “so customers have no idea how much the drivers get paid and drivers have no idea how much the customers get charged.”
The announcement comes on the back of a massive surge in ride-hailing and delivery gig workers in Canada, driven largely by newcomers, according to a Statistics Canada labour force survey. Around 135,000 Canadians aged 16 to 69 provided ride-hailing services in 2023, an increase of 48 per cent compared with 2022.
Recently, the provincial government announced that the Digital Platform Workers’ Rights Act, which includes transparency requirements around pay, will come into force next July. Rang said Uber will be in compliance with the legislation by then.
