Features, Law and Politics, Municipal Government, New York, Transportation

Lyft Agrees To Pay Drivers Minimum Wage 

February 9, 2019

By Steve Wishnia

NEW YORK, N.Y.— Lyft agreed Feb. 6 to pay drivers the city’s new minimum wage for app-based taxi drivers, although it and Juno are continuing their lawsuits seeking to eliminate that minimum.

Lyft drivers are fighting to make real changes in the industry.

The city’s new minimum, which is intended to guarantee that app-based drivers make at least $15 per hour and can take some days off — it’s set at $17.22 per hour after expenses or $26.51 gross — went into effect Feb. 1, after being passed by the City Council in December. A report commissioned by the city Taxi and Limousine Commission last summer estimated that it would raise pay for 85% of the city’s 61,000 active app-based drivers, by an average of more than $6,300 a year.

Lyft and Juno filed separate suits against the TLC Jan. 30, arguing that the formula used to calculate wages favored Uber, their larger competitor. But State Supreme Court Judge Andrea Masley refused to grant a temporary restraining order stopping the minimum from going into effect. Instead, she offered the four main app-based taxi companies the option of putting the extra money in escrow until the case was decided — a solution neither they nor drivers wanted. 

The Independent Drivers Guild, a Machinists Union affiliate that advocates for app-based drivers, collected more than 2,500 signatures on a petition to the two companies, and Lyft relented.

“All workers deserve the protection of a minimum wage, whether they work on an app-based platform or at a brick and mortar store. We are proud to have won this protection for New York City’s app-based drivers and we are glad that Lyft is agreeing to do the right thing and pay the wage,” IDG founder Jim Conigliaro, Jr. said in a statement.

Neither Juno nor Lyft responded to requests for comment from LaborPress by press time.

The key element in dispute is the complex formula used to devise the minimum, explains IDG spokesperson Moira Muntz. As fares are not consistent, it doesn’t require the companies to pay drivers a specific sum per hour. Instead, it adjusts their per-mile and per-minute pay rates based on “utilization factor,” the percentage of time drivers logged into the app actually have a fare — the industry average is 58% — and raises them to the point where drivers would make the minimum on average. 

The principle, Muntz says, is that drivers should get paid for all the time they’re working, not just when they have a fare. This formula — which will be switched from the 58% average to companies’ individual averages in 2020 — is also an incentive for companies to have fewer cars on the road, she adds, because they’ll have to pay drivers more for the time they spend empty. 

That’s the part of the minimum Juno and Lyft object to. Both claim that basing drivers’ pay on utilization factor would give an unfair advantage to Uber, which now has about two-thirds of the New York City app-based market. 

Uber, which opposed the minimum-wage bill but agreed to pay once it went into effect, and second-ranked Lyft both have the same 58% utilization rate, according to the TLC report. Via, the smallest of the top four, had the highest utilization rate, at 70%, and Juno the lowest, at 50%. 

Via, which only offers shared rides, was also the only one of the four that paid drivers more than the new minimum, according to the TLC report. Via drivers averaged $20.99 an hour after expenses, while Juno paid $15.68, Uber $14.17, and Lyft $13.85.

Juno has agreed to add a minimum per-trip payment to any ride where the fare is not enough to meet the TLC’s minimum. But the company, Muntz told LaborPress, is still paying drivers less than the standard. One issue, she says, is that Juno on Feb. 1 informed drivers that surge-pricing bonuses would not be included in its calculations of whether a fare met the minimum — but two days later, that had been deleted from its Website, according to screenshots supplied by the IDG. The result, says Muntz, is that those bonuses will go to reducing the company’s minimum per-trip payment, not to the driver. 

Ironically, when Juno launched in New York City in 2016, it pitched itself as being more “socially responsible” than Uber. It charged drivers lower commissions and gave them stock in the company, but that was eliminated when it merged with Gett in 2017; drivers had to sell their stock back to the company for pennies on the dollar. Still, the two companies claim they have “a common vision—to treat drivers and riders better.”

Judge Masley scheduled the next hearing for March 18.

February 9, 2019

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