Uber Faces Legal Action Over AI Driven Pay Systems for Drivers

Uber has been served with legal demands to halt the use of its artificial intelligence implemented pay systems, amid mounting criticism that the company’s algorithms have significantly reduced driver earnings. The move follows a letter before action sent on Wednesday by Worker Info Exchange, a non-profit foundation, which alleges the app has contravened European data protection laws by varying driver pay through its controversial algorithmic systems.

James Farrar, director of Worker Info Exchange, stated that Uber has employed artificial intelligence and machine learning to establish what he called intrusive and exploitative pay-setting mechanisms, which are said to have negatively impacted the livelihoods of thousands of drivers. The proposed collective action case, to be filed in Amsterdam where Uber’s European base is located, seeks to secure fairer terms for drivers and hold Uber financially responsible for the use of these AI systems.

These legal steps come in the wake of research published in partnership with Oxford University, which revealed that numerous Uber drivers have been earning substantially less per hour since the introduction of a dynamic pricing algorithm in 2023. The research suggested that since the implementation of dynamic pricing, various aspects of drivers’ employment have deteriorated, with stagnant pay rates and lower real hourly earnings in the period following the policy change.

Worker Info Exchange has argued that Uber trained these algorithms using individual drivers’ historical personal data, closely observing their work patterns. Under the General Data Protection Regulation, drivers are said to have the right to demand that Uber revert to previous, more transparent pay-setting systems involving human oversight and to seek compensation for any financial losses incurred.

In response, Uber stated that drivers choose its platform for the flexibility it provides as well as transparency regarding trip fares, destinations, and expected earnings. A spokesperson described the Oxford study as inaccurate and reliant on incomplete data. Nevertheless, Worker Info Exchange maintains that the legal harm began as early as 2020 when Uber introduced upfront pricing for passengers and that unless the company ceases these practices and compensates affected drivers, collective proceedings will be initiated before the Amsterdam district court in line with Dutch collective redress laws.