Uber refunds drivers it overcharged as they join a union

UberBlack drivers Ali Razak (left) and Kenan Sabani stand next to a vehicle along Walnut Street near 17th Street in Center City.

On the same day that Uber Technologies refunded millions of dollars to Philadelphia Uber limousine drivers for overcharges, the company said it would raise the amount it charges the  drivers in commissions.  

“I think it’s wrong,” said UberBlack driver Ali Razak, 31, of South Philadelphia, who has been driving a limousine for four years and got a $3,996 refund. “I want to be happy today, but I’m going to fight tomorrow.”

News about the refunds and commission increase came as the drivers planned to announce Friday afternoon that they would affiliate with a union. Razak is a leader of the Philadelphia Limousine Association, which will join the Newspaper Guild of Greater Philadelphia, Local 10 of the Communications Workers of America.

“The biggest problem is communication. We need someone who can bring them to the table," Razak said.

"We thank the driver community for bringing this issue to our attention, and we apologize for this error," local Uber representative Craig Ewer wrote in an email. "Uber is committed to working with our partners and continually finding ways to improve the driver experience."

Ewer said the company would have no comment on drivers' affiliating with a union, stating, "Drivers are independent contractors." 

The Newspaper Guild represents journalists at Philadelphia Media Network, which publishes the Inquirer, the Daily News, and Philly.com. It also represents freelance writers. CWA represents Verizon employees and many state workers in New Jersey.

Affiliating with the union will give the drivers access to some limited medical benefits, legal assistance, and a vehicle for negotiation, said Bill Ross, the union’s executive director.

“It’s always important that workers who feel they are being mistreated have a voice,” said Ross, who described the refund news as a coincidence but said, “It’s a start.”

At a news conference to announce the affiliation, drivers questioned Ross closely about whether the union would be able to help. Driver Fadi Maghtha said UberBlack drivers should try to control their own destiny, by developing their own app. The customer "is our customer," he said.

Maghtha said he once owned and operated a fleet of 12 UberBlack limos, but now operates only two, having lost $165,000 over two years. He said Uber undercut his business by introducing lower-cost services, such as UberX.  

Razak said he estimated that Uber will pay $4.3 million to local UberBlack drivers, based on about 900 vehicles used by 1,300 drivers. The company said it mistakenly deducted a 25 percent commission per ride instead of 20 percent.     

“Due to an error in our system, an updated service fee addendum was never released to you in the driver app as it should have been,” an email from the company read. “Because of this error we are refunding you 5% plus interest for all UberBlack trips completed from Aug. 26, 2015, until March 2, 2017.  

“You will also receive a new addendum in the driver app stating that the correct service fee for UberBlack is 25%, which you will be charged going forward," the email said.  

The news comes as Uber chief executive Travis Kalanick copes with negative fallout from a YouTube dash cam video of him arguing over the fare structure with an UberBlack driver. “Some people don’t like to take responsibility. … They blame everything in their life on somebody else. Good luck!” Kalanick told the driver.

Since then, Kalanick has issued a statement apologizing to the driver, saying he was ashamed of his behavior, and “must fundamentally change as a leader and grow up.”   

The union cannot help the drivers negotiate a collective-bargaining agreement, because only employees have the right to collectively bargain with employers. Whether the drivers are Uber employees or independent contractors is an issue in litigation nationwide, including a Philadelphia case.

“Our case is on track to be the first one to address the issue,” said the drivers’ attorney, Jeremy Abay of Sacks, Weston, Diamond LLC.

The case, filed in federal court in Philadelphia on Feb. 4, 2016, says Uber improperly classifies UberBlack drivers as independent contractors when they are really employees under the company’s control in many ways. The suit, originally filed in Common Pleas Court, also says that the drivers are not being paid overtime and often earn so little, after fees and commissions, that they do not earn minimum wage.

Uber and Gegen LLC, the entity through which Uber operates in the area, has contested those claims.

UberBlack drivers say their limousine service was the first Uber mobile app offered in the region and initially was successful. Then, they said, the company undercut their business when it introduced UberX, the most commonly used and less expensive Uber service.  

UberBlack’s Philadelphia drivers aren’t the first to unionize. About 35,000 drivers in New York are members of the Independent Drivers Guild, affiliated with the International Association of Machinists and Aerospace Workers. Uber partly funds that guild. 

Ross said that the Newspaper Guild would never accept such an arrangement. “It’s a company union” and raises questions, he said, about whether the union is working hard to get the best deal for the workers.