Taxi and Limousine Commission to raise ride-hailing drivers' pay | Katz Melinger PLLC
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Taxi and Limousine Commission to raise ride-hailing drivers' pay

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For Lyft, Uber, Gett/Juno, Via, and other ride-hailing drivers, the New York City Taxi and Limousine Commission (TLC) just made a game-changing move. After a two-year union campaign, the Commission recently voted to increase the minimum pay that ride-hailing drivers receive and to require bonuses for shared, out-of-town, and wheelchair-accessible rides.

According to information collected by the TLC, the approximately 80,000 ride-share drivers in New York City currently average $11.90 per hour after expenses, or approximately $48,000 per year. However, the TLC has determined that those earnings have been dropping despite the economic success of the largest ride-hailing companies.

Pay increases for high-volume drivers, special situations

Most of the new rule applies only to the four largest for-hire vehicle (FHV) companies, which dispatch at least 10,000 trips per day. According to the TLC, Lyft, Uber, Gett/Juno and Via accounted for more than 75 percent of all such trips in 2016 and 2017. Under the new rule:

High-volume FHV drivers' minimum trip pay will rise to $27.86 per hour, or $17.22 after expenses. This increase is partially to account for the fact that drivers, who are classified as independent contractors, pay their own payroll taxes and are ineligible for paid time off, expense reimbursement, or other benefits employees receive.

The minimum per-trip payment formula takes into account not only driving time and expenses, but also time spent waiting for dispatch and traveling between passengers. Time spent waiting will be used to calculate a base utilization rate for each driver. A low utilization rate could affect the driver's pay.

Drivers of wheelchair-accessible vehicles will receive a higher minimum pay rate to account for the expense of operating such a vehicle.

A new out-of-town rule will help compensate drivers who are returning from out-of-town trips without passengers. These rides will automatically be assigned a 50 percent utilization rate and higher per-mile and per-minute rates.

Today, drivers derive no additional financial benefit from shared rides, yet it's the 40 percent of drivers with the lowest earnings who disproportionately provide these rides. The new rule provides a shared-ride bonus, which has not yet been set by the TLC.

In addition, the new rule adds some transparency to the pay and expenses associated with ride-hailing driving. For example, the largest ride-hailing companies must now provide drivers with detailed receipts so that drivers can calculate whether they received the minimum trip rate required by the rule.

According to labor economists brought in by the TLC, the new rule will result in an average annual pay raise of about $9,600 for each driver.

Uber and Lyft warned that the rule will result in "higher than necessary fare increases" and will be "a step backward for New Yorkers."

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