Lyft just lost its lawsuit against New York City's minimum-wage rule for drivers

A judge has upheld New York City’s minimum-wage rule for ride-hailing drivers, one of the first laws of its kind in the country.

Judge Andrea Masley ruled on Wednesday that a lawsuit originally filed by Lyft in January (a similar suit was filed by Juno, another ride-hailing company, at the same time) was not sufficient to overturn the rule, which took effect in February. The companies argued that the formula for calculating driver pay using a “utilization rate” unfairly benefits Uber.

A Lyft spokesperson passed along the following statement about the ruling:

The TLC’s rules have hurt earning opportunities for drivers, and will diminish competition that benefits drivers and riders. We will continue fighting to provide the best experience for drivers and riders in New York City.

Juno, which is owned by Gett, did not immediately respond to a request for comment.

Lyft maintains, as it did at the time of the filing, that it supports paying a living wage to its drivers in New York City. Lyft says drivers will see fewer rides thanks to the decision, which could translate to lower earnings. Since the implementation of the regulations, both Uber and Lyft said they have stopped hiring new drivers in New York City.

Because of its massive size, Uber’s higher utilization rate will allow it to gain an unfair advantage once companies are allowed to petition to use their own utilization rate after one year of the rules, the two companies said in the lawsuit. Until then, all for-hire vehicles must use the industry rate of 58%.

Here’s the formula the law uses. Lyft has argued that a higher utilization rate, the bottom of the pay-calculation fraction, makes it easier for Uber to lower per-mile and per-minute expenses.

In her decision, Masley said that Lyft’s argument that the rules will give Uber a competitive advantage lacks any factual basis.

“Indeed, it is possible for a smaller company to beat Uber in the UR (utilization rate) category using a different business model focused exclusively on shared rides,” she wrote. “The court cannot accept Lyft’s assertion that the TLC’s use of company specific UR was without any analysis when P&R acknowledged the risk of monopolization.”

(The P&R reference in her written decision is an acronym for Parrott and Reich, the authors of the commissioned study which first proposed the calculation.)

The Independent Drivers Guild, which represents some 70,000 app-based drivers in New York City, praised the judge’s decision.

“The judge’s message today is clear. If ride hail companies want to operate in New York City, they need to pay drivers fairly and follow our minimum wage laws,” Jim Conigliaro Jr., the founder of the Independent Drivers Guild, said in a statement. “This is a proud day for drivers who organised with the Guild for years, taking on Silicon Valley behemoths, to win this historic pay protection.”

The New York City Taxi and Limousine Commission did not immediately respond to a request for comment.

*An earlier version of this post mischaracterized Lyft’s disagreement with the minimum-wage rule. The company takes issue with how it is calculated, not the pay.

Read the judge’s full ruling here:

Lyft vs NYC decision byGraham on Scribd

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