Question
Based on Article below: Uber Admits it Made an Accounting Error and Will Refund Nearly $50 Million to Drivers. How could one of the following
Based on Article below: "Uber Admits it Made an Accounting Error and Will Refund Nearly $50 Million to Drivers". How could one of the following options may it have prevented the dilemma associated with the payments to the drivers? Why is this so important?
Option A: Review required deductions for accuracy prior to finalizing payroll.
Option B: Ensure all payroll personnel are properly trained on payment agreement policy for drivers.
Option C: Hire more competent accounting managers.
Uber's rocky relationship with its drivers has resulted in the companyoffering olive branchesand occasionalcompensation, and that pattern continues with a colossal error the ride-hailing company admitted to on Tuesday: drivers in New York City were shortchanged by nearly $50 million in payments,The Wall Street Journalreported.
Uber had apparently been calculating New York City drivers' earnings based on an incorrect formula. Instead of subtracting taxes and fees before collecting its 25 percent commission as per its nationwide agreement with drivers, Uber was collecting its take based on a ride's total fare, theJournalreported.
It's unclear exactly how much Uber pocketed thanks to the incorrectly-applied commission, which lasted for more than two years. The company says it will refund the entire amount plus interest, which amounts to an average of $900 per driver. Using an independent estimate of 50,000 New York City-area drivers, theJournalcalculated that the blunder will cost the company $45 million.
Uber is a tech company that prides itself on fine-tuning its smartphone app based on the data that it collects from both riders and drivers, so it's hard to fathom how an apparently simple arithmetic error could have persisted for more than two years. The company said it uncovered the mistake as it was overhauling its driver receipt system.
"We made a mistake and we are committed to making it right by paying every driver every penny they are owed, plus interest, as quickly as possible," Rachel Holt, regional general manager of Uber in the U.S. and Canada, said in a statement to theJournal. "We are working hard to regain driver trust, and that means being transparent, sticking to our wordand making the Uber experience better from end to end."
Regaining trust won't be easy given Uber's checkered past when it comes to dealing with drivers, especially those in New York. In January, the companyagreed to paya $20 million settlement to the Federal Trade Commission to resolve charges that it misled prospective drivers about how much they could earn by signing up. Uber claimed on its website that the median annual income for drivers in New York City was more than $90,000, when in reality less than 10 percent of all drivers in the city made that much, according to the FTC's complaint.
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