Algorithm-based pay rolls out for Uber drivers in Ontario

Kissing up to your boss in the months leading up to bonus season might become a thing of the past as algorithms increasingly take over compensation decisions.

Driving the news: Uber is rolling out a new algorithm in Ontario that will entirely determine drivers’ pay. The system expands on basic metrics like the distance a trip to factor in the time of day, the day of the week, and even the efficiency of the route a driver takes.

• An analysis of driver pay showed the average pay per trip fell ~12% shortly after Uber introduced this change in the US.

Why it matters: Algorithm-based compensation is already making its way from the gig economy into wage and bonus decisions at companies like Amazon. Some experts warn that the trend could lead to less predictable and potentially lower compensation.

• Italy has even started fining companies that don’t provide an explanation for an algorithm’s compensation decision or give workers a way to challenge it.

Bottom line: With almost a quarter of Canadians now working in the gig economy, algorithm changes like this can have a major impact on millions of people’s take-home pay.

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