Uber and Lyft Found a Loophole to Pay NYC Drivers Less

When New York became the first city in the country to mandate that rideshare companies like Uber and Lyft pay their drivers a minimum wage, it seemed like a major win. Low, unpredictable wages are built into the companies’ business models, predicated on their ability to classify their legions of drivers as independent contractors rather than employees, exempting companies from following labor laws that include standards like a minimum wage.

In New York City, some drivers in previous years made as little as $6 an hour, largely as a result of being unpaid for the vast amounts of time they spend waiting between rides. So in 2018, the city passed a law to change that, ensuring that New York’s roughly 84,000 rideshare drivers receive a predictable minimum wage like any other worker.

The legislation requires these companies pay a $17.22 hourly minimum. Overseen by the NYC Taxi and Limousine Commission (TLC), the rate is calculated annually on the basis of a company’s average “utilization rate,” which measures how often drivers are giving rides versus waiting for new rides per working hour. The higher the utilization rate, the lower the amount Uber or Lyft is required to pay drivers per ride.

The bill basically worked: it raised drivers’ wages without significantly raising costs or wait times for customers. But as of late, rideshare companies have found a new way to evade the fix, exploiting a loophole at drivers’ expense. Uber and Lyft have a long history of arbitrarily deactivating drivers’ accounts (and not only in New York). But workers across the city say that since June, the companies have begun frequently and arbitrarily locking them out of rideshare applications when they try to log in to begin picking up customers.