Uber admits its miscalculation cost New York drivers millions of dollars

Uber said yesterday that it had made a mistake in the way it calculated its commissions that cost tens of millions of dollars to its New York drivers. The company said it would correct the practice and make good the drivers' lost earnings.

According to the ride-hailing service, it had been taking its cut from a figure, including state taxes, rather than a pretax fare. If a passenger paid over $20, of which $2 represented taxes, Uber's commission was a percentage of the full $20, not of $18, as it should have been. The cumulative difference, even if one were to consider pocket change per ride, was vast, according to commentators.

''We are committed to paying every driver every penny they are owed - plus interest - as quickly as possible,'' Rachel Holt, the company's regional general manager for the US and Canada, said in a statement.

Commentators point out further that Uber's handling of passenger payments raised questions about a larger legal issue that had greater significance, whether the $2 in taxes was improperly coming out of the drivers' wallets.

Under Uber's contract with drivers, the ride hailing service could allow the company to deduct only its 25 per cent commission, not taxes, from their fares.

A drivers' advocacy group in New York last year said in a lawsuit, the company was making its drivers swallow the tax burden - a practice, the group said, amounted to wage theft.

The problem arose from the company's failure to adhere to a 2014 adjustment to commission calculations, according to Uber officials, which resulted in Uber taking its 25 per cent cut based on what was known as the ''gross fare'', which included New York City's roughly 2.5 per cent black car fund fee and the city's 8.875 per cent sales tax.

''This payout is an attempt by Uber to pull a fast one to avoid court oversight and shortchange drivers in the process. Nice try.'' Bhairavi Desai, executive director of the New York Taxi Workers Alliance, said in a statement. ''We'll see Uber in court to win back all of the money drivers are owed, including up to double damages. Meanwhile, we'll celebrate the victory of stopping this unlawful practice moving forward.''