Lyft, Juno sue to block $17 minimum wage for drivers in NYC

Ride-share companies Lyft and Juno asked a judge to block a New York City rule setting a minimum wage for drivers.

The rule, passed by New York’s Taxi and Limousine Commission in December, requires that drivers for market leader Uber Technologies, Lyft, Juno and Via earn at least $17.22 an hour. 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.

In support of the rule, which is set to take effect Friday, the TLC pointed to evidence of low driver pay and high company markups.

In a court filing Wednesday, Lyft said the rule “threatens to harm drivers and riders alike by reducing driver earnings, raising rider prices, and undermining competition” in the industry. The company said that by requiring a minimum payment to some drivers per trip rather than just per week, the rule would encourage drivers to focus on shorter trips in more congested areas and hamper its ability to offer cheaper fares when there’s less demand.

lyft
The Lyft Inc. website is displayed on an Apple Inc. iPhone 5s during a Lyft ride for an arranged photograph in Washington, D.C., U.S., on Wednesday, July 9, 2014. Lyft Inc. is taking its ride-sharing service into New York this week and is abandoning its trademark pink mustaches in the process, taking on rival Uber Technologies Inc. in one of the biggest U.S. markets. Photographer: Andrew Harrer/Bloomberg

Lyft claimed in court papers that the way the rule ties minimum pay to how often drivers have a rider in their vehicle gives “an automatic and perpetual advantage” to Uber, the largest company in the industry.

“It’s no secret that Uber has tried to put us out of business in the past,” Lyft spokesman Adrian Durbin said in a statement. “They’ve failed repeatedly, and the TLC should not assist them in their efforts.” He said the lawsuit wasn’t targeting the city council’s law that mandated there be minimum pay rules for drivers.

Juno, which has tried to set itself apart from its competitors by paying drivers more, also argued against the minimum wage rule, claiming it “is inherently flawed and fundamentally unfair; severely and disproportionately hurts smaller, socially-conscious companies like Juno; and will destroy competition in the New York City ride-hail market.”

A spokesperson for Uber, which is not a party in either the Lyft or Juno suit, declined to comment.

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. If she decides to let the rule stand, drivers would be paid the money from the escrow funds. The judge set March 18 for a hearing on the matter.

De Blasio called the two lawsuits “unconscionable” in a post on Twitter.

The ride-hailing companies classify their drivers as independent contractors, meaning that they, like their counterparts in taxis, have been excluded from many federal labor protections, including the right to unionize, and from local protections like the city’s $15 minimum wage for workers at companies that employ more than 10 people.

“The idea that this lawsuit is about anything other than avoiding paying drivers a fair wage is laughable," said Jim Conigliaro Jr., founder of the Independent Drivers Guild, an advocacy group that mobilized in favor of the pay rule.

Conigliaro said his group is calling on the companies to pay their drivers the minimum wage beginning Friday, regardless of what happens in court.

The Lyft case is Tri-City LLC v. New York City Taxi and Limousine Commission, 151037/2019; the Juno case is Omaha LLC v. New York City Taxi and Limousine Commission, 650574/2019; New York State Supreme Court (Manhattan).