Money-Losing Uber Says It “Mistakenly” Underpaid NYC Drivers

After recently promising to take steps to boost drivers’ wages, Uber Inc. has admitted that, over the last two-and-a-half years, it “mistakenly” underpaid drivers in New York City.

The company claims it came forward voluntarily after discovering the issue, which, considering how the company has seemingly bounced from one PR crisis to the next, is probably a smart move. Uber’s highly-paid communications team has hopefully learned by now that sometimes it’s better to get out ahead of the story – because then you can shape it on your own terms. A few months back, the company announced that it had – again, “mistakenly” – underpaid drivers in Philadelphia.

Uber is, somewhat expaseratingly, the most highly valued startup in the world with a valuation of nearly $70 billion, even though it lost nearly a billion dollars in the fourth quarter of 2016, and has been called “a cash-burning machine” by one analyst who saw its books.

Here’s how it happened, according to WSJ:

“Under the terms of its November 2014 nationwide driver agreement, Uber was meant to take its commission, generally 25%, from U.S. drivers based on fares after any taxes and fees were deducted. Uber said that, instead, in New York City it calculated a higher cut using the full fare before accounting for sales tax and a local injury-compensation fund fee.

Uber told The Wall Street Journal it would refund the money plus interest, which comes to an average of about $900 per driver.”

Uber didn’t say how much repaying the drivers would cost, but WSJ calculated that the total amount is probably somewhere around $45 million, or to about $900 per driver, based on an estimated 50,000 drivers.

All New York City drivers, whether still active or not, will be eligible for a refund as long as they’ve completed a trip since the company’s nationwide driver agreement was signed in November 2014, the WSJ noted.

The company blamed the light payments on an “accounting error,” but even WSJ noted the fact that such an error occurred allegedly by accident “is striking for a company whose business hinges on complex mathematical formulas that match drivers with riders and that crunch fares by the millisecond based on traffic, demand and other factors.”

We’ll have to wait and see if the internal investigation into Uber’s workplace culture – which is being led by former attorney general Eric Holder – turns up evidence of any more “mistakes.”

The last six months have been nothing short of terrible for Uber. Here’s a roundup of all the other scandals that’ve emerged since then:

• Another tale of sexism and unacceptable workplace behavior in Silicon Valley company has emerged. This time it’s at Uber, according to an explosive blog post published on Sunday by a former company engineer named Susan Fowler Riggetti.
• Uber’s newly-hired VP of engineering Amit Singhal was asked to, and did, resign on Monday after the company learned from Recode that he was accused of sexual harassment shortly before leaving Google a year ago. Here’s more on the difficult position of former employers in this case.
• A video showing Uber CEO Travis Kalanick rudely arguing with a long-time driver at the end of his ride was published by Bloomberg. “I need leadership help,” Kalanick said in an apology he issued shortly after.
• Susan Fowler Rigetti, the former Uber engineer who wrote of discrimination, said she’s hired attorneys after a new law firm began to investigate her claims. Uber confirmed it has hired Perkins Coie, which reports to former A.G. Eric Holder, who’s leading the investigation.
• Uber said on Thursday that it will finally apply for a DMV permit to test self-driving cars in California after its cars’ registrations were revoked in December because it refused to get the permit.
• Charlie Miller, one of the two famous car hackers who joined Uber’s Advanced Technology Center in August 2015, announced he’s leaving the company.
• The New York Times uncovered a secret Uber program called Greyball, through which the company uses software and data to evade law enforcement in cities.
• Keala Lusk, a former Uber engineer, published a blog post detailing how her female manager mistreated her, signaling that the company’s problematic culture isn’t limited to the men who work there.
• Ed Baker, Uber’s head of product and growth, resigned. Though the reason is unclear, he was allegedly seen kissing another employee three years ago, which was anonymously communicated to board member Arianna Huffington, according to Recode.
• A report outlines a trip by a group of Uber employees to a Seoul karaoke-escort bar in 2014, which included company CEO Travis Kalanick and his girlfriend, Gabi Holzwarth. After arriving, several male employees picked escorts to sit with, and went to sing karaoke. Uncomfortable, a female marketing manager, who was part of the group, left after a couple of minutes, while Holzwarth and Kalanick left after an hour.
• California regulators have recommended that Uber be fined $1.13 million for failing to investigate and/or suspend drivers who are reported by a passenger to be intoxicated. The state requires ride-hailing companies to have a zero-tolerance policy for driving under the influence of alcohol or drugs.
• A new report says Uber used a secret program dubbed “Hell’ to track Lyft drivers to see if they were driving for both ride-hailing services and otherwise stifle competition. Only a small group of Uber employees, including CEO Travis Kalanick, knew about the program, according to a story in The Information, which was based on an anonymous source who was not authorized to speak publicly.