Uber and DoorDash are raising prices for customers in California in order to pay for new benefits guaranteed to rideshare drivers and food delivery couriers under a new statewide law that’s set to go into effect this week.
The cost to Uber customers will vary depending on the city and type of service, the company said. For example, each food delivery bill in Los Angeles increased by 99 cents. In San Francisco, it’s an additional $2. The surcharge for rides is 75 cents in Los Angeles and 30 cents in San Francisco. It goes as high as $1.50 in less populated areas.
DoorDash, rather than a flat fee, will roll out slightly higher service fees starting Wednesday, and may adjust certain promotions, such as DashPass, that could also lead to higher prices, a spokesperson told Business Insider.
The surcharges are intended to help cover the costs of minimum earnings, per-mile expenses, healthcare stipends, accident insurance, and other benefits that rideshare and food delivery companies will soon be required to pay workers.
Those perks became enshrined in California law after voters in November passed Proposition 22 — a controversial law that Uber, DoorDash, Lyft, Instacart, GrubHub, and Postmates authored and spent more than $200 million trying to pass.
The law exempts companies from having to provide rideshare and food delivery drivers with basic employment benefits guaranteed to other Californians under the state’s gig work law, AB-5, and denies certain labor protections to those workers.
After AB-5 went into effect this year, Uber, Lyft, and other companies refused to reclassify drivers as employees as required by the law, meaning they never provided the benefits it guaranteed.
As a result, while the partial benefits guaranteed by Prop 22 will cost companies less than those guaranteed under AB-5, they are nonetheless new costs the companies hadn’t previously incorporated into their pricing — thus, the new surcharges from Uber and DoorDash.
As per Business Insider, both Uber and DoorDash are struggling to maintain a profit and a part of the new costs is being passed to customers.
