Lyft loses petition to block NYC’s driver minimum wage rules

Lyft’s attempt to block city rules mandating a driver minimum wage was denied in court Wednesday.

State Supreme Court Judge Andrea Masley ruled in favor of the city, denying a petition from e-hail companies Lyft and Juno, who argued that the way the city wanted to institute its pay rates would give an unfair advantage to Uber, the company with the largest market share. The companies stressed that they weren’t against a minimum wage, but rather the city’s formula for the earnings.

“This is a victory for the hardworking drivers of New York City, who have been taken advantage of by these companies for far too long," said Mayor Bill de Blasio in a statement. "With a guaranteed fair income, they can better provide for their families…this decision is the culmination of years of effort to raise driver pay and treat some of the city’s hardest workers fairly."

The city’s pay rule, which went into effect in January, set a minimum rate for drivers at the equivalent of $17.22 an hour, after expenses, regardless of the trip fares collected. The first-of-its kind equation incentivizes companies to cut down on the time drivers spend cruising without passengers. App-based workers drive without passengers about 40% of the time, according to a city-commissioned report.

The report, which inspired the rule, also found that 85% of app-based drivers earned less than a living wage.

As part of her decision, Judge Masley dismissed assertions that a formula using a utilization rate gives Uber an edge.

“Via, not Uber, has the highest UR. Therefore, Lyft’s fear of Uber domination based on a better UR is factually incorrect,” Masley wrote. “Indeed, it is possible for a smaller company to beat Uber in the UR category, using a different business model focused exclusively on shared rides.”

The lawsuit progressed as Lyft filed its initial public offering and became a publicly-traded company. 

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