Uber Raises Minimum Age For Rideshare Drivers Because Of Higher Insurance Costs, Litigation Concerns

Rideshare company Uber announced on Thursday that because of California’s high insurance rates and litigation environment, that they will no longer be hiring drivers in the state who are under 25.

In recent months, Uber has been dealt several legal and work-related setbacks. Last month, the California Supreme Court ruled that Uber could not limit the ability of drivers to take the company to court for labor law violations, despite signing an agreement to bring their own work-related legal claims in private arbitration with the company. In addition, insurance companies, who had been legally obligated to keep their rates the same for several years because of the pandemic. With that lifted, and mixed with rising inflation, rates soon doubled and tripled, with many insurance providers even dropping people caused by the high costs.

Suddenly struck with higher costs in an industry where they could be more easily sued, Uber decided to change policies. Prior, Uber had hired people beginning at age 21, with Uber Eats, their food delivery subsidiary, hiring people as young as 19. In a statement on Thursday, Uber announced that the new minimum age is now 25 for rideshare drivers, with Uber Eats drivers keeping the minimum age at 19 because of the latter subsidiary accounting for one-third of the company’s revenue and drivers not being responsible for any passengers.

“California’s insurance coverage requirements for rideshare are baselessly higher than nearly every other car on the road: up to 10 times that of taxis and thirty times that of personal vehicles,” said Uber. “As a result of these lopsided requirements, personal injury attorneys have created a cottage industry specializing in suing rideshare platforms like ours, pushing Uber’s California state-mandated commercial insurance costs to rise by more than 65% in just two years. By increasing the age requirement for new drivers to 25, we hope to mitigate the growth of those costs.

“We hope to discuss legislative and regulatory changes that will improve the experience for all California drivers.”

While no one under 25 will be hired in the future, all current drivers under 25 will be grandfathered in and will not lose their jobs. The shift to age 25 also means that Uber is now on par with Lyft, who has had an age minimum of 25 for years. For many monitoring the insurance industry in California, Uber’s decision came as not much of a surprise, as many companies with drivers are beginning to mull over similar changes caused by the rising insurance rates.

“Uber won’t be the last company to make such a big change coming from those higher insurance rates,” said employment lawyer Esteban Gomez Jr. “If you recall, earlier this year several insurance companies dropped new homeowner insurance policies or severely limited how many new ones would be offered. It wasn’t just because they felt like it, it was because California has made it easy for people to sue, and wildfire risks have been affecting more and more people. They reached their breaking point and had to do something drastic.

“Well, the same thing happened with Uber today. Insurance rates are climbing, they can be more easily sued, and there have been more accidents on the road out there. They reached their limit.”

As of Thursday, other rideshare companies and delivery services have not announced similar actions.