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How Do Rideshare Companies Like Uber and Lyft Actually Work?

Author
Alicia Betz
July 20, 2022

The days of traditional taxis are long gone for many people; typical cab hailing has been replaced with calling a car via an app from rideshare companies like Uber and Lyft. The process of getting and using an Uber or Lyft is different from hailing a taxi, and the entire business model is different. 

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Drivers for rideshare companies are independent contractors who use their own vehicles. They do not need to go through training as a typical taxi driver would. Because everything is controlled through an app and drivers can be located almost anywhere, rideshare companies make finding a ride incredibly convenient. 

Learn how rideshare companies work, and determine whether using a company like Uber or Lyft is right for you. 

Who Works for Rideshare Companies? 

The drivers that work for rideshare companies are not employees of those companies. Instead, they are independent contractors. This means they are considered self-employed, and they get to choose if and when they pick up riders. They also get to choose their hours and the amount of time they work. 

Unlike taxi drivers, rideshare drivers do not need to complete any training prior to becoming a driver. Different companies may have different requirements for their drivers, but in general, drivers only need to hold a valid driver’s license, have a vehicle, and have a clean driving history. Due to sexual assault allegations, many companies now also require drivers to pass criminal background checks. 

Here are the driver requirements for Uber:

  • Meet minimum age to drive
  • Have at least one year of driving experience; 3 years if you are under 25
  • Have a driver’s license
  • Use an eligible 4-door vehicle
  • Have insurance for your vehicle
  • Pass a driving record and criminal history check

Of course, requirements vary by company, but these are standard requirements many rideshare companies use. 

How Are Riders Matched with Drivers? 

Most rideshare companies operate through apps that allow drivers to request a ride. Depending on the demand, the rider may be charged more or less for the ride. 

Once a rider requests a ride, drivers in the area can see and pick up the request. Drivers can choose whether they want to pick up the rider or not. If a driver picks up the ride, the rider will be notified of the driver’s ETA, and they will also be given information such as the make and model of the car. 

Safety of Rideshare Services

Most rideshare services have a rating system, where riders can rate drivers and vice versa. This helps both riders and drivers stay safe, as rude or dangerous people will appear with a low star rating. Simply knowing that you are going to be rated also helps keep the platforms safe because people are typically on their best behavior if they know a rating is at stake. 

Because they aren’t employees with set hours, rideshare drivers have no obligation to pick up a ride request. If the request is from a rider they don’t want to pick up for any reason, they don’t have to. Similarly, riders can cancel their request if they don’t feel comfortable with the driver that picked it up. Depending on the company and the circumstances, riders may be charged a fee for canceling their ride. 

Despite these ratings and other safeguards like background checks, using a rideshare service can still be risky. Ever since these services have gained popularity, there have been thousands of allegations of sexual assault of both riders and drivers. 

Critics of rideshare companies question how safe it is to get into a car with a stranger. They are right to be concerned as these lawsuits continue to mount. Before getting into a car from a rideshare service like Uber or Lyft, it’s essential that you know how to stay safe

Safety concerns don’t just come from assault allegations, either. Because drivers have no formal training, you’re taking a risk regarding the skill of your driver when you enter an Uber or Lyft. 

The vast majority of people walk away from Uber and Lyft rides without incident, but that doesn’t negate the fact that there are safety concerns. 

What Kinds of Cars Do Rideshare Companies Use? 

Rather than using a fleet of vehicles owned by the company, drivers use their own private cars when driving for a rideshare company. Most companies have certain requirements for cars, which might include a minimum seat and car age requirement. 

Of course, vehicles need to be in good working condition, and they need to be up to date with license, registration, and inspection. 

How Do Rideshare Drivers Make Money? 

When you use a rideshare company, the money that you pay does not go directly to your driver. Pay structures vary by company, and even by time and location. In general, drivers get paid a base fee that is lower than what riders pay when they enter their vehicle. From there, they can earn more based on the time of day, the distance of the trip, and tips from customers. 

Because business is conducted via an online platform, drivers do not carry cash. For both Uber and Lyft, drivers get paid weekly, and their money is directly deposited into their bank accounts. 

How Do Rideshare Companies Make Money? 

Rideshare companies take a cut of the money customers pay. In many cases, they take 20%-25% of the overall charge for the trip. Many companies allow drivers to keep 100% of any tips riders give them. 

Should I Use a Rideshare Service? 

There is no doubt that rideshare services have shaken up the traditional taxi industry. While more convenient than taxis, rideshare services can be more expensive, and they carry a personal safety risk that taxis typically do not. If you do use a rideshare service, make sure you stay safe. If you’re worried about your safety, it may be better to use a more traditional transportation service, such as a taxi, bus, or subway. 

If you have used a rideshare service and you were sexually abused or assaulted, you can join thousands of others who have filed lawsuits against rideshare companies like Uber and Lyft. Nobody should have to endure abuse, and you may be entitled to compensation.

Free Case Evaluation

If you were harmed by Uber, Lyft, or another rideshare service, we can help you fight for your rights and compensation.

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