Lyft drivers: carpool companies block pay raise for New York drivers

It is possible that thousands of Lyft and Juno pilots in New York are not getting the expected increase. At least not right away.

The two carpool companies temporarily blocked a New York City law that would require them to pay an average of $ 5 more per hour to drivers starting Friday, saying it unfairly benefits their main competitor, Uber.

In December, New York adopted the country's first minimum wage rate for drivers working on motorcycle applications, ending a controversial two-year battle to make sure drivers can earn a decent living . Mobile phone companies were expected to start paying about $ 17.22 an hour (after expenses), about $ 5 more than the current average of $ 11.90 an hour, according to the company. Independent Drivers Guild. The new pay rate is calculated per race, but the guild expects it to offer full-time pilots an additional pay of $ 9,600 a year.

However, Lyft and Juno filed lawsuits on Wednesday – two days before the wage increase came into effect – claiming that the compensation formula is unfair and will cost Uber less money because it counts more users and can make drivers more busy. The minimum wage rate is calculated based on the length and distance of each trip. (Uber is not involved in the lawsuit.)

According to them, the way in which the law calculates the hourly compensation of the driver favors applications that have more users, namely Uber, and can therefore keep the drivers more busy. Instead of completely blocking the law until the dispute was resolved, a judge said companies could put salary increases on an escrow account, according to The Verge. The money would remain in a bank account until the lawsuits are resolved. This means that Lyft and Juno will not pay the drivers unless the two companies decide to comply with the law by then.

The move is part of the city's crackdown on Uber and other application-based mobile phone services that have cluttered the city with thousands of additional cars, while contributing to the pay of thousands of drivers.

As Uber and Lyft drivers are considered independent contractors and not employees, they are not subject to the city's minimum hourly wage, which will reach $ 15 per hour by the end of the month. The new rules ensure that drivers earn at least the minimum wage, with a few extra dollars to cover payroll taxes and paid leave.

This change also represents Uber's most aggressive regulatory effort since the Silicon Valley technology giant, which disrupted urban transportation in 2011. The battle in New York is particularly crucial for Uber because it represents the largest market of the company. In May, the city recorded 18 million rides based on applications, six times more than during the same period three years ago.

Uber and Lyft opposed the salary increase, saying it would hurt competition and deter drivers from taking Manhattan runners out. But the law was pbaded with the overwhelming support of the city council and Mayor Bill de Blasio, who does not seem satisfied with the last minute trial.

At the time of publication, the four carpool companies that would be affected by the new law had still not responded to a request for comment from Vox.

New York City plays a central role in Uber's economic experience

New York City has been trying for years to regulate Uber and other chairlift services.

In August, the city council approved a number of draft laws regulating rental vehicles, including a limited number of drivers who could drive for Uber and Lyft, and allowing the city's Taxi and Limousine Commission to set rates of pay. minimum.

The invoices also required companies using apps to provide detailed information about each trip, including the duration, cost, driver's earnings, and commission of the company.

Lawmakers in New York City had tried – and failed – to enact similar laws in 2015 that would have regulated business expansion. At the time, Uber was only four years old and the start-up was engaged in a fierce global campaign to stop any local attempt to regulate its business, threatening to leave cities that would have done so. He spared no effort to cancel the proposals of Mayor Bill de Blasio.

But since then, the hiking industry has exploded and the problems that come with it are harder to ignore. The city of New York now plays a central role in the economic experience of the entertainment economy. The number of people who make a living as Uber and Lyft drivers in the city is now six times larger than it was three years ago. In July 2018, more than 78,000 cars were affiliated with the four major flying applications, a sharp increase from the 12,500 cars registered in January 2015.

To get an idea of ​​the importance of this change, consider this data point from the New York Taxi and Limousine Commission, which regulates professional drivers in the city: If Uber recognized his drivers as employees, by opposition to independent contractors, it is the largest private employer in the city.

In other words, Uber would be the largest private employer in the largest city in the world's largest economy.

Many carpool application drivers earn less than the minimum wage

The explosion of mobile phone applications has been beneficial for start-up investors, but not for current drivers.

In New York, the unrestricted growth of these companies put the city's taxi drivers to the test and made it difficult for drivers to compete and make a decent living.

This dynamic was recently put in the spotlight with the announcement that six professional drivers in the city would have committed suicide over a 12-month period in 2017 and 2018, including three taxi drivers. who were struggling to make ends meet.

The rise of Uber and other similar businesses has also created tension between city taxi drivers and newcomers behind the wheel. But the two groups united to push city legislators to control businesses by limiting the number of drivers in the city and creating a minimum wage rate.

"The city council should send a clear message to these companies: if you want to do business in our city, you have to fairly pay the workers," said Ryan Price, executive director of the Independent Drivers Guild, in a statement. . last year.

The new laws are at the heart of Uber's business model, which is based on a huge reservoir of drivers available at all times. This means that competition is strong and that drivers have to work long hours.

The city created the minimum hourly wage rate after badyzing compensation data and driver revenues for the four largest application-based companies: Uber, Lyft, Juno, and Via.

When economists from the New School and the University of California, Berkeley, released a report in July containing limited data on wages, they discovered an alarming fact: driving for distressed driving applications New York is not really a part time job. people who want to earn extra money.

More than half of their drivers carry full-time pbadengers and about half of all drivers help families with children with this income. But their incomes are so low that 40% of drivers are entitled to Medicaid and about 18% to food coupons.

The problem of low wages is largely related to the clbadification of drivers. Because they are independent contractors and not employees, Uber and Lyft are not required to pay them the minimum wage.

In New York, the minimum wage is now $ 15 an hour for large employers. But to get the equivalent of this amount, independent contractors in the city should earn about $ 17 an hour, taking into account payroll taxes and some paid holidays.

The New School report indicates that the median hourly wage of drivers based on New York-based apps is about $ 14 / hour. "Application companies could easily absorb an increase in driver compensation with minimal tariff adjustment and slight inconvenience for pbadengers," they wrote.

Carpool companies do not agree and new lawsuits suggest Lyft and Juno have not finished fighting it.