Uber announced Tuesday that it would reclassify more than 70,000 drivers in the United Kingdom as “workers” who will receive a minimum wage while completing trips, holiday time and eligibility for a pension plan.
In an opinion article in the Evening Standard, Uber CEO Dara Khosrowshahi called the announcement a decision “to turn the page.”
“Our thinking on this issue has evolved over time, and I will be the first to admit that we’ve struggled to identify solutions that work for Uber and for those who earn on our platform,” he wrote.
The designation crucially does not make the Uber drivers full employees, as they will not be paid for idle time between trip requests. The minimum wage in the U.K. is roughly the equivalent of $12 dollars an hour.
The shift comes on the heels of a landmark British Supreme Court decision that the ride-hailing giant should provide some basic worker’s rights.
The two lead claimants in that challenge say the new worker designation does not meet legal requirements.
“The Supreme Court ruled that drivers are to be recognized as workers with entitlements to the minimum wage and holiday pay to accrue on working time from log on to log off whereas Uber is committing only to these entitlements to accrue from time of trip acceptance to drop off,” James Farrar and Yaseen Aslam said in a statement through the App Drivers & Couriers Union.
“This means that Uber drivers will be still short-changed to the tune of 40-50%,” they added.
That figure lines up roughly with a study from the UC Berkeley Labor Center that found Uber and Lyft drivers were between trips approximately 33 percent of the time in six major American cities.
A spokesperson for Uber disagreed with the union's characterization of the Supreme Court decision and argued that paying workers for all their time driving would take away "flexibility."
“If drivers were entitled to the minimum wage for all the time they simply had the app open, this would mean set shifts and a drastic cut to the number of drivers who can earn with Uber, at a time when the UK needs more earnings opportunities not less," they said.
The agreement is still significant despite those concerns, and could set precedent for other ride-hailing companies.
“Uber is just one part of a larger private-hire industry, so we hope that all other operators will join us in improving the quality of work for these important workers who are an essential part of our everyday lives,” Jamie Heywood, Uber’s regional general manager for Northern and Eastern Europe, said in a statement.
Tuesday's announcement comes just a few months after Uber and other gig economy companies successfully pushed a California ballot measure creating a unique worker designation that also does not guarantee pay for the whole time drivers are working.
--Updated 6:30pm to include a statement from Uber