Uber introduces a two-minute grace period, then a fee for riders

On Wednesday, the company said it would test a pilot program that makes passengers in some cities pay a fee if drivers wait more than two minutes. The move comes as Uber settled a closely watched suit with drivers.

Robert Galbraith/Reuters/File
The Uber logo is seen on a vehicle near Union Square in San Francisco. The ride-hailing company said Wednesday it would begin testing a pilot program that charges passengers a small fee if they make drives wait for more than two minutes once they request a ride.

Running more than two minutes late for an Uber ride? Now, you may have to pay a fee for that tardiness.

The ride-hailing service is testing a new effort to respond to drivers' concerns by requiring passengers who cancel after a two-minute grace period to pay a "small fee," which may vary from city to city.

Even if the rider shows up late, after two minutes, drivers will be compensated to make up the wait time, the company says. The program is currently being tested in New York City, Phoenix, Dallas, and New Jersey.

"Whether it's lost keys, a change of plans, or a driver further away than anticipated, we know there are times when you need to cancel a trip," the company said in a blog post on Wednesday. "But it can be a headache for drivers who are already on their way. Under our new pilot, we're asking riders to cancel trips within two minutes once they’ve been matched with a driver."

That's a change from the company's previous plan, which compensated drivers if a rider took more than five minutes to cancel. Rival Lyft also offers a five-minute cancellation policy that charges tardy passengers between $5 and $10.

Uber's move comes a week after the company reached a settlement with drivers in California and Massachusetts in a closely watched class action suit.

The drivers had challenged Uber's model of considering drivers as independent contractors rather than employees, which would mean they would have to provide health benefits and other compensation.

Instead, the company agreed to a $100-million settlement on April 21 that lets the service keep its current business model, though it comes with some concessions for drivers.

Chief among them is that the company will have to meet regularly with two groups of drivers. One is an appeals panel made up of highly rated drivers on the service's app. It will consider appeals from drivers who have been deactivated – Uber's term for being fired – though Uber will get the last word, tech site Re/Code reports.

The second group is a driver association that's intended to serve in place of a union, though it won't be legally recognized as one.

In addition, the drivers will get $84 million of the money and the rest if Uber goes public. But the amount allotted to individual drivers could vary considerably. Depending on how many miles they drive, that mean much as a few thousand dollars to as little as $12 per person, Fortune reports.

In December, the Seattle City Council voted separately to allow drivers to unionize, which would allow them to negotiate their working conditions. But the process has been stalled as city officials work to finalize the rules.

Uber has also faced questions about its decision not to add a tipping function to its app, which is already provided by rival Lyft.  

In its defense, the company says it doesn't bar customers from tipping, but hasn't included a feature because of a more provocative argument: that tipping is inherently racially biased.

The company cited a 2008 study by researchers at Cornell University and Mississippi College that examined tipping in the restaurant industry, finding that "consumers of both races discriminate against black service providers by tipping them less than white service providers."

But some drivers were skeptical. "Race has nothing to do with it," Keisha Seaton, who drives for Uber and Lyft in Boston, told The Boston Globe. "It's all about the service you provide, and if you provide top-notch, five-star service, you expect to be compensated as such," said Ms. Seaton, who is black.

Recently, she told the paper, she had received a $20 tip on a $10 fare from a woman who told Seaton she was giving the tip simply because "she was glad there are good people in the world."

On Wednesday, the company cast the cancellation fees as another effort to improve its service. Previous efforts have included programs to track speeding drivers and an effort to stop harassment of drivers by encouraging drunken passengers to play with a colorful children’s toy.

"Our goal is to help riders and drivers connect quickly and easily so they can get on their way," the company wrote, "and we hope pilots like these give us the flexibility to test new ideas and improve the reliability of our platform."

Editor’s note: This article has been modified to clarify that riders have a two-minute grace period to cancel their ride, after which they will owe the driver a small fee.

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