Uber is paying its NYC drivers 'tens of millions' because of an accounting error that underpaid them for years

An accounting mistake means that Uber has been short-changing its drivers in New York City for years. 

On Tuesday, the company announced that it will be repaying drivers "tens of millions" after it took more than its share of the fares customers paid for rides in New York City. On average, most drivers in the city will receive about $900 as Uber doles out money to make up for its mistake, according the company. 

“We are committed to paying every driver every penny they are owed - plus interest - as quickly as possible," said Rachel Holt, Regional General Manager, US & Canada. "We are working hard to regain driver trust, and that means being transparent, sticking to our word, and making the Uber experience better from end to end.” 

The accounting error stems from an update in 2014 to Uber's terms of service. At the time, Uber said it would be taking its service fee, typically around 25% of a ride, from the net fare of a ride — the price the passenger paid minus the sales tax or other fees. 

Yet, since 2014, Uber has been taking its share from the gross fare of a ride in NYC, which includes sales tax and worker's compensation charges. According to Quartz, that resulted in Uber taking an extra 2.6% more from drivers than it should have.

Uber says it discovered the error when updating its terms of service for the recent launch of its new route-based pricing — a controversial pricing model that might have some Uber passengers paying more for a ride based on where they are going.

Now, Uber is starting the process of notifying all of the drivers who have driven in New York City over the last 2.5 years. Any driver that completed a ride in the last 90 days will receive a direct deposit into their bank account. Drivers not active in the last three months will have to confirm that their bank information is still current to receive the money owed.

The accounting mistake is the latest blow in Uber's never-ending year of mishaps. The company faces a lawsuit from Google's self-driving car spin-out, is awaiting the results from an investigation into harassment in its workplace, and remains on the hunt for a COO to provide a balance to its provocative CEO, Travis Kalanick. 

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