Economy

Lyft is suing over New York's minimum pay for drivers law

Lyft is suing over New York's minimum pay for drivers law”

While Uber has a higher utilization rate than Lyft or Juno, for the first year of the program, all three companies would operate under its utilization rate of 58%.

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

The companies say New York's measure is "inherently flawed and fundamentally unfair" and would make it impossible for them to gain ground against Uber, which dominates the USA market. The new city law is supposed to guarantee drivers a rate of $17.22 per hour after expenses, which supporters say is a livable wage. He said the lawsuit wasn't targeting the city council's law that mandated there be minimum pay rules for drivers.

Lyft will not abide by the taxi commission's new pay rules, but explained that it will still increase driver pay in NYC, just with its own formula.

"It's no secret that Uber has tried to put us out of business in the past", Lyft spokesman Adrian Durbin said in a statement.

On top of those price hikes, Uber passengers in much of Manhattan will start paying $2.75 more per trip, and 75 cents per trip for group rides, separate state congestion surcharges that a New York Supreme Court judge ruled Thursday could take effect while a challenge from taxi drivers and medallion owners proceeds. 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. 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. "They've failed repeatedly, and the TLC should not assist them in their efforts".

Lyft communications manager Campbell Matthews said in an emailed statement, "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".

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 amount is then divided by the utilization rate, the amount of time drivers have passengers in the auto. The greater the "utilization rate"-the percentage of time the vehicle is occupied-the less the ride-hail service has to contribute to meet the pay threshold".

Uber and Juno did not immediately respond to requests for comment from Business Insider.

Do you work for Uber, Lyft or Juno?

The Independent Drivers Guild said in a statement if Uber joins the lawsuits, it would be "a nightmare for drivers who are desperately awaiting this raise".

Mayor Bill de Blasio tweeted that the lawsuit was "unconscionable", arguing that "the overwhelming majority of these companies' drivers earn less than minimum wage".



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