Uber Raises Prices in New York City, Citing New Minimum Wage Law

04 February, 2019, 04:11 | Author: Brooke Harris
  • A driver holds a phone with the Lyft app

Ride-hailing companies, Lyft and Juno have reportedly filed a lawsuit against the city of NY for implementing a new law that makes it mandatory for the firms to pay drivers a minimum wage.

The rideshare services claim that the minimum wage pay rate set by the Taxi and Limousine Commission (TLC), would be too expensive and give Uber an unfair advantage.

Reports from Forbes cite that the law, set to go into effect starting February 1st, 2019, establishes a mandatory wage scale of $17.22/hour after expenses or $26.51/hour before expense for drivers, as tied to vehicle utilization rate based on Uber's average.

As for its New York City drivers, the San Francisco company said, some offers of bonus pay may no longer be available, and starting in May its premium Uber Black service will be restricted to drivers with at least a 4.85 customer rating out of 5.

"The city here and the drivers are being sandbagged by this challenge".

"It's no secret that Uber has tried to put us out of business in the past", a Lyft spokesperson said in a statement. The Independent Drivers Guild, which represents more than 70,000 ride-hail drivers in New York City, said it believes these lawsuits are just a ruse to not pay drivers more.

"Our lawsuit does not target the law passed by City Council, but instead addresses the specific way the TLC plans to implement the rules, which would advantage Uber in New York City at the expense of drivers and smaller players such as Lyft", the spokesperson said in a statement. The reasoning is that because Uber has more drivers and is more widely used than Lyft, it's easier for Uber drivers to reach the $17.22 threshold without Uber having to incur any additional expenses to make up the difference.

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A judge ruled in Lyft's favor Friday and offered to hold off - but Lyft (and any other ride apps unwilling to pay the minimum wage) will have to pay into an escrow account in the meantime.

"The idea that this lawsuit is about anything other than avoiding paying drivers a fair wage is laughable", said Jim Conigliaro, Jr.

When that time period is up, companies can petition to use their own utilization rates if they are higher than 58%.

The explosion of ride-hail vehicles in New York City has been a source of strife for policymakers, disability advocates, taxi medallion holders and driver groups. In addition to the utilization rate, Lyft also said it is problematic the TLC requires a minimum wage be applied to each ride - not to a weekly calculation of rides - which it says goes against the local law.

Do you work for Uber, Lyft or Juno?

However, Uber and Via, which also operate in New York City, will not participate. "However, we also want to do right by our riders and are working hard to ensure that your ride remains as affordable as possible", the blog reads.

Juno didn't respond to an email seeking comment. Both Lyft Inc. and Juno filed lawsuits Wednesday to block the rule, which is part of Mayor Bill de Blasio's effort to cap the growth of app-based, ride-for-hire platforms and reduce traffic congestion.

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