Lyft sues New York over new driver minimum pay law

Ride-hailing service Lyft is suing the city of New York to block its new driver minimum wage rules, saying the rules will punish Lyft for being a smaller company than its main competitor Uber.

Lyft, in a petition filed with the New York County Supreme Court, is asking the New York City Taxi and Limousine Commission to “vacate” its driver minimum wage rules, which are set to go into effect on Friday. 

{mosads}The new rules, which passed in December, will require ride-hailing app drivers to make at least $17.22 per hour after expenses. The New York City Taxi and Limousine Commission’s (TLC) stated goal was to increase average pay for the tens of thousands of drivers by about $9,600 per year without disrupting passengers’ experiences. 

The commission was seeking to protect drivers from being underpaid by their companies after reports indicated ride-hailing app drivers were being paid significantly less than minimum wage.  

“We agree with the goal of increasing driver earnings and improving economic opportunity for all New Yorkers,” Lyft’s chief policy officer, Anthony Foxx, said in a statement to The Hill. “We simply don’t want to have the TLC mistakenly hand Uber an unfair advantage over smaller players and actually hurt driver earnings.”

The new rules are based on a formula that takes into account the amount drivers are paid per mile and per minute, also known as a “utilization rate.” Lyft said in a blog post that it is that rule, which rewards drivers for taking more customers, that will leave Lyft at a disadvantage compared to the significantly larger Uber. 

“In the rush to pass the implementation rules, it adopted an approach that will advantage the largest company, in which an immediate and perpetual advantage allows the market leader to charge lower prices and undercut its competitors, with the effect compounding over time,” Lyft said. “Providing a pricing advantage to Uber hurts our ability to offer the best and most competitive experience for both drivers and riders.”

The smaller ride-hailing app Juno also filed its own lawsuit contesting the new rules on Thursday, making a similar argument, according to multiple reports.

“It’s no secret that Uber has tried to put us out of business in the past,” a Lyft spokesperson said in a statement to CNN. “They’ve failed repeatedly, and the TLC [Taxi and Limousine Commission] should not assist them in their efforts.”  

Lyft did not immediately respond to The Hill’s request for comment.

“The rule likely will result in decreased overall gross driver compensation,” the petition states. “In short, while increasing driver earnings is a worthy objective (and one Petitioners do not challenge), the rule the TLC actually passed is not reasonably designed to achieve that goal.” 

Ride-hailing app drivers union the Independent Drivers Guild in a statement called the lawsuit’s claims “laughable.” 

“The idea that this lawsuit is about anything other than avoiding paying drivers a fair wage is laughable,” founder of the union Jim Conigliaro Jr. said in a statement, according to CNN. “Regardless of any lawsuits, we are calling on Uber, Lyft and Juno to commit to paying their drivers no less than the required minimum wage by Friday.” 

— Updated 6:52 p.m.