Last week, Uber admitted to failing to account for New York's sales tax and injury compensation fee while taking its commission from drivers, an apparent accounting error dating back to November 2014 that cost drivers millions of dollars. Uber has promised to pay drivers back with interest, but according to a new report in the Times, the company knew about the issue since at least 2015, despite claiming they only just realized the mistake.
When Uber announced the accounting error last week, the company said they discovered the violation of the terms of service agreement while updating its contract. "We made a mistake and we are committed to making it right by paying every driver every penny they are owed, plus interest, as quickly as possible," Rachel Holt, regional general manager of Uber in the U.S. and Canada, told Gothamist in an email at the time. "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."
But the Times reports that a small update to Uber's contract dating back to December 2015 suggests the company was aware that it was wrongly taking commission on gross fares. In November 2014, the contract read that Uber's commission would be taking on "net" fares, i.e., those that are pretax, and that if cities “require taxes to be imputed in the fare," like in New York, "Uber shall calculate the service fee based on the fare net of such taxes."
Then, according to the Times, in December 2015 Uber replaced the phrase "imputed in the fare" to "calculated on the fare," which suggests the company was trying to clarify that they wouldn't take commission on full fares that included tax. But even after the tweak, the company continued to take too much commission.
The change was "very powerful circumstantial evidence that they understood that their calculation of the commission was wrong," plaintiffs attorney Richard Emery told the paper. "It seems clear that they were looking at it."
Uber declined to comment on the Times' report.
It's also noteworthy that the issue of over-calculating commission came up in class action lawsuit filed by the Taxi Workers Alliance last year. The TWA argued that Uber "violated" the terms of service agreement by taking "the taxes and BCF surcharge amounts entirely from the Driver's portion, on top of the Service Fee that Uber states will be the only deduction from Driver-earned fares." Uber told Gothamist they were not aware of TWA's assertion at the time.
Meanwhile, a number of Uber drivers in New York say the reimbursement they're being offered by the company—an average of about $900 per driver—is inadequate, and Gizmodo reported earlier this week that some drivers think Uber's trying to distract them from pursuing claims in a class action lawsuit from last year, which asserted that Uber took sales tax from drivers’ fares instead of from riders.
"They are trying to cop to the cheaper fix rather than admitting the larger problem with taking out the sales tax from driver’s pay when they should have been assessing it on top of the fare,” driver Tim Cavaretta, who is named in the suit, told Gizmodo. "I think they thought they could get away with it. Now that they know they are clearly caught on that count, they are trying to appease drivers with that and hope we don’t stick it to them on the larger issue."