Uber is suing the city over its plan to raise the minimum wage for ride-share drivers by nearly 24% per mile – claiming the drastic hikes will damage the entire ride-sharing industry, new court papers allege.
The city Taxi and Limousine Commission last month approved the first increase in metered fares since 2012 — including increases in per-mile and per-minute rates for Uber and Lyft Inc. drivers.
In its Manhattan Supreme Court lawsuit Friday, Uber argues the new hike would mean shelling out an additional $21 million to $23 million a month amid the holiday season — or raising rider fares 10%. And that would “irreparably damage Uber’s reputation,” the suit claimed.
The new rule will take effect Dec. 19 and raise driver pay, from 2019 rates, by 7.42% per minute and 23.93% per mile, with a sample trip of 30 minutes and 7.5 miles requiring a minimum payment of $27.15, according to the TLC.
The exact cost to ride-sharing customers is unclear since each company would have to decide how much to hike fares.
Uber alleges the increase is “arbitrary and capricious” and “will harm riders, drivers and/or the ride-share industry as a whole,” because as rider prices will go up, the number of rides — and drivers’ wages — go down.
The whole purpose of the rule will be undermined if drivers’ earnings ultimately go down, the suit claims.
Uber claims the TLC “suddenly” switched how it calculates how much to increase driver pay for inflation “picking an individual month or small subset of months and suddenly switching to a volatile inflation index” – which the suit says is a “drastic departure from the Commission’s past practice or any rational approach.”
“Fundamental economic principles reject the Commission’s approach as unsound, and it appears selected to achieve a predetermined result,” the suit charges.
The TLC also didn’t provide the records it used to make the calculation or allow the public to participate and comment on the new rule, the filing alleges.
The TLC began raising driver minimum wages in February 2019 with a minimum pay rule, and has twice raised it for inflation – in February 2020 and March 2022.
Uber didn’t challenge either of the previous hikes and “strongly supports drivers receiving fair compensation.” But the increases should rely “on consistent data and methods,” the suit claims.
Uber wants an emergency ruling to halt the rule from taking effect Dec. 19, pending the lawsuit.
“With this latest rule-making, on top of the annual inflation adjustment, the TLC is choosing to invent a new methodology that locks in this summer’s high gas prices in perpetuity with a ‘mid-year’ adjustment that takes place 12 days before the end of the year,” Uber spokesperson Freddie Goldstein said in a statement.
“The TLC should have followed its usual annual adjustment and instituted a temporary gas surcharge when gas prices were actually elevated,” Goldstein said.
TLC Commissioner David Do said they plan to fight the lawsuit.
“We must stand behind our workers without traditional employment protections,” Do said. “New York City leads the nation in protecting drivers, and this important rule reflects that reality.”
“We are confident that we are well within our legal authority in implementing this important rule, and we are vigorously fighting this lawsuit,” the statement said.
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