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New York City sets minimum pay rate for Uber, Lyft drivers

Drivers will be paid $17.22 an hour after expenses moving forward.

New York City became the first American city to implement a pay floor for Uber and Lyft drivers this week, after the NYC Taxi and Limousine Commission voted to set a minimum pay rate for ride-hailing drivers.(Photo credit: Drew Angerer/Getty Images)
New York City became the first American city to implement a pay floor for Uber and Lyft drivers this week, after the NYC Taxi and Limousine Commission voted to set a minimum pay rate for ride-hailing drivers.(Photo credit: Drew Angerer/Getty Images)

New York City became the first American city to implement a pay floor for Uber and Lyft drivers this week, after the NYC Taxi and Limousine Commission voted to set a minimum pay rate for ride-hailing drivers.

The vote, which was held Tuesday, means drivers can expect to take home $17.22 per hour after expenses, which the Commission calculated to be the contractor equivalent of New York City’s $15 minimum wage.

“Today we brought desperately needed relief to 80,000 working families,” said Jim Conigliaro Jr., founder of the Independent Driver’s Guild. “All workers deserve the protection of a fair, livable wage and we are proud to be setting a new bar for contractor worker’s rights in America.”

Uber has maintained that the new minimum pay rate will lead to higher fares and said the new rules don’t take into account any of the company’s incentives or bonuses.

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The reality, however, is that ride sharing giants have consistently struggled to pay their drivers a living wage. A March study by experts at the Massachusetts Institute of Technology concluded that Uber & Lyft drivers make a median profit of $8.55 before taxes, and that more than half end up earning less than their state’s minimum wage.

In May 2017, Uber also admitted that an “accounting error” meant it had underpaid its drivers by $45 million since November 2014. It was forced to repay the affected drivers an average of $900. In a separate incident in January that year, Uber paid out a $20 million settlement over claims that it misled drivers over how much they would earn. The Federal Trade Commission, which filed the lawsuit, also claimed drivers were paying 60 percent more on weekly car lease payments than what Uber said they would be.

Uber’s problems weren’t confined to the United States. Last November, a British employment tribunal ruled that Uber drivers were considered company workers and not “self-employed,” meaning they had to receive minimum wage, sick leave and paid time off. The ruling was significant as London is one of Uber’s biggest markets outside the United States.

However Uber drivers’ quest for better working conditions has proceeded in a very stop-start fashion. While drivers have been handed a victory in New York, Uber employees in Seattle have been stuck in a more than two-year legal battle over their right to unionize. The Seattle City Council unanimously passed the measure in 2015 but it’s been stuck in litigation ever since, prolonged further in May when a judge ruled it could be challenged under federal antitrust law.