Ride Hailing Companies Lyft & Juno Sue City Over Minimum Wage Law

Ride Hailing Companies Lyft & Juno Sue City Over Minimum Wage Law

Juno and Lyft say the minimum wage of $17.22 (after expenses) that was approved by the city council in December will make it impossible for their companies to compete with Uber, which still has the upper hand in most of the country including NY, the US' largest ride-hailing market.

An industry-wide pay rate is only mandated for the first 12 months of the rule, and Lyft argues this gives the company with the biggest marketshare - Uber - a "built-in" advantage over others.

Reports from Forbes cite that the law, set to go into effect starting February 1st, 2019, establishes a mandatory wage scale of $17.22/hour after expenses or $26.51/hour before expense for drivers, as tied to vehicle utilization rate based on Uber's average.

Apparently, because Uber is a larger and more known company, it could have higher utilization rates, according to Lyft.

As for its New York City drivers, Uber said, some offers of bonus pay may no longer be available, and starting in May its premium Uber Black service will be restricted to drivers with at least a 4.85 customer rating out of 5. A report commissioned by the TLC previous year found 96% of ride-hail drivers were not making the city's minimum wage.

The city's ruling on for-hire vehicle driver wages said Uber, Lyft, Gett/Juno and Via account for 75% of the ride-sharing business in New York City, with the overall trips booming from 42 million in 2015 to almost 159 million trips in 2017.

Conversely, Uber says it will not be following Lyft and Juno's lead to withhold driver pay. It will make it more hard for smaller companies to compete on prices and payment for drivers, as well as continue to service less populated areas, the petition said.

Two days ago, ridehailing competitors Lyft and Juno both sued the New York Taxi and Limousine Commission to block the new driver minimum wage law, claiming the implementation will hurt their businesses while advantaging the industry behemoth, Uber.

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Back in August, the city council voted on a minimum rate for independent contractors driving for ride-hailing apps such as Uber, Lyft, Via, and Juno.

After a one-hour hearing Wednesday afternoon in Manhattan, Judge Andrea Masley said that beginning when the rule takes effect, Lyft and Juno may instead pay into escrow the difference between the amount paid to their drivers and the $17.22 minimum.

"The idea that this lawsuit is about anything other than avoiding paying drivers a fair wage is laughable", said Jim Conigliaro, Jr. The amount is then divided by the utilization rate, the amount of time drivers have passengers in the auto. New York City Taxi and Limousine Commission, 151037/2019; the Juno case is Omaha LLC v. The greater the "utilization rate"-the percentage of time the auto is occupied-the less the ride-hail service has to contribute to meet the pay threshold".

Uber has not filed a lawsuit, but the controversy could put a pall on its upcoming IPO as well as Lyft's.

Do you work for Uber, Lyft or Juno?

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

For a company like Via, that means riders will still have to pay more for rides in Manhattan. It's part of Mayor Bill de Blasio's effort to cap the growth of app-based, ride-for-hire platforms and reduce traffic congestion.

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