Uber offers US drivers perks to boost retention

Ride-hailing app Uber will help its US drivers find health insurance and give discounts on their phone bills and auto repairs as the company tries to attract and retain drivers despite offering no benefits or guaranteed pay. 

The new programme, called Momentum, will offer drivers up to 18 per cent discounts on their personal smartphone plans, discounts of up to 15 per cent at certain auto repair chain stores and the ability to work with a third-party adviser in finding which health insurance plan would be best for them.

As Uber expands, it needs to encourage drivers to sign up to and spend more hours working for the company. Uber’s drivers are considered contractors, rather than employees, meaning they can work flexible hours but receive none of the benefits or protections afforded to employees. Most use their own cars and many rent their phones from Uber for $10 a week. A significant number work for Uber and its rivals, such as Lyft, taking rides from whichever platform is busier or offers a higher rate at a given time.

“Our goal here is just to create the best working environment,” said David Plouffe, the former adviser to President Barack Obama who now works on policy and strategy for Uber. “This will be more importantly a reward for our drivers who really help build the business.”

The so-called sharing economy that Uber and similar companies have pioneered has attracted thousands of workers who like the ability to set their own hours. But it has also drawn criticism from those who say the company overstates the salary typical drivers can earn and has frequently cut the price of rides to attract more customers.

The company is facing a US class action lawsuit accusing it of misclassifying workers as independent contractors rather than employees. The plaintiffs argue that Uber should reimburse drivers for their expenses. Separately, the city of Toronto on Tuesday went to court seeking to ban Uber from operating there, citing in part the lack of training and insurance it provides its drivers.

Drivers will be eligible for Momentum as long as they have driven for Uber between 30 and 50 hours a month, depending on the type of car they drive, or about four hours a week. That covers “pretty much all” of Uber’s drivers, said Mr Plouffe. The programme will probably save the average driver hundreds of dollars a year, he said.

“These are . . . rewards for contractors as opposed to benefits and I think that’s an important distinction,” said Mr Plouffe. “There are actually a lot of businesses that provide reward programmes and benefits to contractors. This is not unique in that regard.”

The offering is unique in the world of ride-hailing apps, he said. Uber has been doing better than rivals Lyft, Sidecar and Hailo, but still needs to attract more drivers as it continues expanding. The company hopes to raise a further $1bn using a valuation likely to exceed the $17bn it reached in its last fundraising, according to people familiar with the deal.

The programme should help it recruit and retain drivers, Mr Plouffe said.

“This is just the start. We are going to build on this,” he added.

Source: http://www.ft.com/intl/cms/s/0/446dd780-6f...