February 05, 2019 12:00 AM Drivers up in arms as Lyft blocks pay raise

Funds will go into escrow as court battle continues

Lyft and Juno on Jan. 30 sued to block a new minimum-wage rule from going into effect Feb. 1, largely on the basis that it would be great for Uber and devastating for them. As it turned out, Lyft and Juno were right, although maybe not in the way they meant.

Although the lawsuit failed to win a restraining order, drivers were up in arms over the effort. "Stop Driving for Lyft they are evil!" a member of the Independent Drivers Guild wrote last week on a closed portion of its Facebook page.

Following the ruling, as news spread that Lyft would comply with the court order to put the funds to cover the pay raise into escrow while continuing with litigation, Councilman Brad Lander—sponsor of the ride-hail minimum-wage bill—tweeted that he would delete his Lyft app.

Lyft fought back, saying it would pay drivers—using its own rate card rather than the Taxi and Limousine Commission's formula—a minimum of $27.86 an hour over the course of a week.

Adding a supplemental payment on a weekly, rather than on a per-ride basis, may benefit Lyft but is not viewed favorably by drivers. On Friday night, the Independent Drivers Guild, which represents more than 65,000 app-based service drivers, tweeted that "by hiding and witholding partial payment until the end of the week," Lyft's policy "seems designed to manipulate drivers into staying on the road longer."

Among Lyft's objections was that the rule calculates the minimum wage for each trip; the company wants to balance out the numbers over a week, the better to offer incentives and discourage shorter rides.

"Drivers shouldn't suffer while we work to right the TLC's mistakes," a Lyft spokeswoman said, "so we are immediately raising driver pay as we continue our fight in court."

The TLC mandate also sets a minimum of $27.86, which comes to $17.22 after expenses (the equivalent of a $15 minimum wage once payroll taxes and paid leave are factored in). If a driver would have made more under the TLC's formula, Lyft will put that money into escrow. A Lyft spokeswoman said there would likely be no money going into escrow. Juno declined to comment.

Lyft's move has not won over the Independent Drivers Guild. The group, which represents more than 65,000 app-based service drivers, tweeted that "by hiding and withholding partial payment until the end of the week," Lyft's policy "seems designed to manipulate drivers into staying on the road longer."

Other critics agreed that Lyft should stick with the original regulations.

"When they start complying with the rule," Lander said, "I'll think about getting back in a Lyft."

Uber, which has had more than its share of public relations disasters, had to be hugging itself in glee.

That was not Lyft's only stumble. The company announced it had, in fact, obtained the temporary restraining order it had sought and pointed to a filing state Supreme Court Judge Andrea Masley posted Friday morning.

"This TRO victory acknowledges that Uber was handed a sweetheart deal by the TLC that would irreparably harm Lyft," the Lyft spokeswoman said.

But the document showed (and a city Law Deparment spokesman confirmed) showed no such thing. It merely said the TLC would need to show in court why Lyft should not be granted a restraining order.

The next court date is March 18.

Rough road

Lyft may have a point about the TLC formula helping Uber. It relies on a utilization rate—how much time per hour cars carry a passenger. The higher the utilization rate, the less the service has to pay its drivers. For the first year, Juno, Lyft and Uber will operate under Uber's rate of 58%. Lyft worries, however, that Uber will grow and, under the rules, can petition to increase its rate—potentially leaving the No. 2 player in the dust.

Lander was not buying it, pointing out that "for the entirety of the first year," it will have the protection of an industrywide rate.

The biggest winner may be the tiny (4.4% market share) pooled-service Via, which has the industry's highest utilization rate. While Uber announced that it was raising fares to cover the pay raise, Via said it would not need to, as its drivers already make more than the minimum. Via also will be hurt least by the congestion surcharge on for-hire vehicles in Manhattan below 96th Street, which went into effect on Saturday: Pooled rides are charged 75 cents compared with $2.50 for most Uber and Lyft fares.

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