April 24, 2019

New ride-hail minimum-wage takes effect while Lyft, Juno lawsuit pending

04 February 2019, 04:11 | Joann Bryant

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A driver holds a phone with the Lyft app

Uber competitors, Lyft and Juno, have filed separate lawsuits against New York City's Taxi and Limousine Commission over a new law requiring that drivers for ride-hailing companies make a minimum wage of $17.22 an hour.

New York City already tried to regulate ride-sharing services past year, citing traffic problems and lower driver wages as the reason for capping how many ridesharing drivers could be active at a time.

The two ride-share companies sued to block the pay hike early Wednesday morning claiming it would be too expensive and give market leader Uber a larger advantage.

Instead of a flat hourly rate for all drivers, the city's new minimum wage for drivers will be calculated by how often a driver has a rider in their vehicle while working for a company like Uber or Lyft. The taxi commission estimated that the rule will benefit 96% of the city's ride-hailing drivers to the tune of almost $10,000 annually.

The new policy is created to increase drivers' gross pay to at least $27.86 per hour, or $17.22 after expenses-the equivalent of $15 per hour for a regular employee when factoring in paid sick leave and payroll taxes. The concern from Lyft and Juno is that that utilization rate is more reflective of Uber's business, which captures more market share, than theirs. 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. Masley also said companies could submit the funds for drivers on a weekly basis. It will make it more hard for smaller companies to compete on prices and payment for drivers, as well as continue to service less populated areas, the petition said. New York City Taxi and Limousine Commission, 151037/2019. "They've failed repeatedly, and the TLC should not assist them in their efforts".

"The idea that this lawsuit is about anything other than avoiding paying drivers a fair wage is laughable", Jim Conigliaro Jr., founder of the Independent Drivers Guild, said in a statement. The Independent Drivers Guild, an advocacy group affiliated with the International Association of Machinists and whose funders include Uber, rebuked the escrow option.

Mayor Bill de Blasio addressed the suit by Lyft and Juno on Wednesday, calling it "unconscionable". "The rules ensure minimum income protections, are fair and legal, and we'll vigorously defend them in court", a spokesman for the city's Law Department wrote. Companies can petition the TLC within the first year to use their own rate if it is higher than 58%-something Via has already done. The company did not immediately respond to a request for comment. The greater the "utilization rate"-the percentage of time the auto is occupied-the less the ride-hail service has to contribute to meet the pay threshold".

Uber had stayed silent on its competitors' lawsuits but in its blog post, Uber makes clear that while it is complying with the new law, it's not satisfied with how the TLC has applied the new driver pay minimum either.

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