Features, Law and Politics, New York, Transportation

Judge Dismisses Lyft Challenge To Minimum Wage

May 2, 2019

By Steve Wishnia

Struggling app-based drivers have scored a significant court victory this week.

NEW YORK, N.Y.—A State Supreme Court judge dismissed Lyft’s attempt to void New York City’s $17.22-an-hour minimum wage for app-based drivers May 1, saying the company had failed to prove the way it was calculated was unreasonable.

Lyft filed the suit against the city Taxi and Limousine Commission Jan. 30, two days before the minimum, set by the TLC last December, went into effect. It requires app-based taxi companies to set their per-mile and per-minute pay rates high enough so drivers make at least $17.22 per hour after expenses or $26.51 gross. 

The company challenged the TLC’s use of “utilization rate,” the percentage of time cabs are occupied, to calculate the minimum. That formula was designed to compensate drivers for time spent working without a fare. Lyft contended that unfairly favored Uber, because as the largest app-based taxi company, it could undercut the others on prices. It also argued that the TLC should have based the minimum on average weekly payments to drivers instead of on per-trip payments. 

State Supreme Court Judge Andrea Masley dismissed those claims. She said Lyft’s argument that the utilization-rate formula favored Uber was “factually incorrect” because Via, the smallest of the top four app-based taxi companies, had the highest utilization rate.

“Lyft complains that the TLC overlooked that utilization can also increase by decreasing the number of hours worked by drivers,” Judge Masley wrote. “Indeed, that is the TLC’s goal: for drivers to be deployed efficiently instead of the industry model which relies on ‘persistent excess capacity’ of drivers, which allows FHVs [for-hire vehicles] to compete with each other for passengers by providing short wait times.”

The judge also rejected the company’s argument that the TLC acted unreasonably by setting minimum per-trip payments to ensure drivers would get at least $17.22, instead of basing it on average weekly payments. With per-trip payments, drivers would occasionally come out ahead and get more than the minimum.

The TLC, Masley wrote, was concerned that “Lyft’s approach would turn the minimum standard into a pay ceiling, as opposed to a pay floor. Indeed, Lyft complains that the per-trip calculation ‘overshoots’ the mark.”

“The judge’s message today is clear. If ride-hail companies want to operate in New York City, they need to pay drivers fairly and follow our minimum wage laws,” Independent Drivers Guild founder Jim Conigliaro Jr. said in a statement. “This is a proud day for drivers who organized with the Guild for years, taking on Silicon Valley behemoths, to win this historic pay protection.” 

“To Lyft and Uber we say: Time and again we keep beating you. And we’re just getting started,” New York Taxi Workers Alliance executive director Bhairavi Desai said. “The minimum-pay rule was just the first step to stop these companies from cutting driver pay again. Now, we are uniting to win one minimum rate of fare across all sectors with at least 80% of that fare guaranteed to app drivers so a minimum-wage floor doesn’t become the ceiling, and for job security against Uber and Lyft’s rampant ‘deactivations,’ Silicon Valley-speak for unjust firings.”

Mayor Bill de Blasio called the ruling “a victory for the hardworking drivers of New York City, who have been taken advantage of by these companies for far too long” and “the culmination of years of effort to raise driver pay.”

Lyft is the second-ranked app-taxi company in the city, with about 23% of the market. Uber has about two-thirds, and Juno and Via the rest.

Judge Masley also ordered Lyft to pay the TLC’s legal fees.

May 2, 2019

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