Since May of this year, ride-hailing platforms Uber and Lyft have been implementing a “lockout” policy for New York City drivers to avoid paying wages during idle periods. According to Bloomberg, they have already saved millions of dollars in wages.
To combat the minimum wage regulations set by the New York City Taxi and Limousine Commission (TLC), Uber and Lyft have been enforcing a “lockout” policy since May this year, restricting drivers from logging into their apps during idle periods to avoid paying wages. Despite reaching an agreement with the TLC at the end of July to reduce the restrictions on app logins, drivers have reported that the situation has not improved much.
Bloomberg analyzed over 5,300 app screenshots and interviewed about 120 drivers, finding that the “lockout” occurs almost every hour of the day, affecting the livelihoods of over 800 ride-hailing drivers and making it difficult for them to pay taxes, car loans, rent, and credit card bills.
The New York Post reported that TLC has set a minimum wage for ride-hailing drivers, not based on a fixed rate but calculated using a complex formula, with one key factor being the utilization rate of ride-hailing services, which is the ratio of passenger-carrying time to idle time. If TLC identifies a decrease in app utilization during the annual assessment, they will adjust the formula, leading to companies paying more in driver wages. Therefore, ride-hailing companies will maintain their app utilization rates. The current rate stands at 58%, meaning that out of every 100 minutes worked by a driver, 58 minutes are spent carrying passengers, while the remaining 42 minutes of idle time still require the ride-hailing platforms to pay drivers wages.
According to Bloomberg’s research, for every 1 percentage point drop in utilization rate, the two major platforms would have to pay an additional $29 million in wages. Since implementing the “lockout” policy in May, they have increased the utilization rate, saving millions of dollars in wages thus far.
The New York Post reported that Uber spokesperson Josh Gold stated that Bloomberg’s claims are inaccurate, and in fact, the companies have been implementing “lockout” policies since the TLC introduced wage regulations for ride-hailing drivers in 2018. Lyft spokesperson CJ Macklin also mentioned that due to the unique wage regulations in New York City, they have had to enforce a “lockout” for drivers, which is not necessary in other locations, indicating that a long-term solution is needed for this issue.