Lyft sues to block NYC’s driver minimum wage law

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Today, ride-hail drivers in New York City will begin receiving a new wage: a minimum of $17.22 per hour excluding expenses, thanks to new rules from the Taxi and Limousine Commission. Additionally, Juno believes that even while spreading the utilization rate across all companies a driver is logged into, the utilization rate will still result in Uber being able to pay drivers less than Juno is required to pay.

Uber riders will now see price changes as a result of the first-of-a-kind driver minimum wage law in New York City.

The companies also say the new minimum wage should not be applied to each ride, which conflicts with local law, but rather to a weekly calculation. Lyft's concern is that, as Uber grows and increases its share of rides, it will petition to use a higher utilization rate, allowing the company to contribute less to driver pay and potentially offer lower fares. The amount covers the $15 minimum wage, a driver's gas, auto costs, miles traveled and time driving.

The companies argue the complicated formula that set a pay floor at $17.22 an hour after expenses unfairly benefits Uber.

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"Our lawsuit does not target the law passed by the 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 spokesperson said.

Without giving specific rate increases, Uber said "to account for the implications of this new rule, we will be increasing the price of Uber trips in NYC". They argue this makes it more hard for smaller companies to compete on prices and payment for drivers, as well as continue to service less populated areas.

Lyft, which filed its similar lawsuit shortly after Juno, is not trying to stop the entire law, a spokesperson pointed out. "They've failed repeatedly, and the TLC should not assist them in their efforts".

Judge Andrea Masley set a March 18 hearing and in the meantime offered companies the option of placing the additional pay in escrow pending her decision. The amount is then divided by the utilization rate, the amount of time drivers have passengers in the auto.

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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. The number is based on drivers' miles traveled plus time driving, which is then divided by "utilization rate".

In its suit, Lyft accuses the commission of bias toward Uber.

Uber has not filed a lawsuit, but the controversy could put a pall on its upcoming IPO as well as Lyft's. "Lyft and the gang should be ashamed that while their executives and investors are millionaires, their drivers, who do all the work, take home less than minimum wage and are even taking their own lives out of desperation". Lyft, which is smaller with services only in the United States and Canada, seems to be focusing on being a stable company with ride-hailing as its core business.

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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Juno did not respond to a request for comment from Business Insider.