New York City’s Taxi and Limousine Commission (TLC) passed a new regulation on June 25th that prohibits ride-hailing platforms such as Uber and Lyft from arbitrarily blocking driver accounts. Simultaneously, the algorithm for driver earnings has been adjusted, with an expected 5% pay raise for approximately 81,000 drivers throughout the city.
Since New York City first set a minimum wage for ride-hailing platform drivers in 2019, drivers have long complained that Uber and Lyft have been avoiding paying the minimum wage by using tactics like “lockouts” to kick drivers out of the app. Some drivers have even been forcibly logged out while in the middle of a trip, leading to interrupted journeys and lost income.
The new regulation, set to come into effect on August 1st, includes the following key points: (1) Platforms must give a 72-hour notice before blocking a driver account, and the blockade cannot exceed 16 hours. Any violations will result in a $500 fine for the platform; (2) Updates to the minimum wage calculation method, no longer solely based on passenger time but also taking into account the distance traveled; (3) Driver earnings are expected to increase by approximately 5% due to algorithm adjustments.
TLC Chairman David Do stated, “These new regulations not only effectively close loopholes and provide stronger protections for drivers but also offer reasonable wage increases in line with inflation.”
Uber and Lyft have cautiously expressed support for the new regulations but still have concerns about the new wage calculation formula. An Uber spokesperson mentioned that the previous system “created incorrect incentives, hindered innovation, and caused inconvenience for drivers.” Lyft, on the other hand, believes that the new rules may still limit driver earnings, increase passenger fares, and decrease the availability of vehicles.
At present, there is no public information indicating that Uber or Lyft will file a lawsuit regarding this matter. The new regulations are expected to provide substantial protection and income improvements for a large number of ride-hailing drivers in New York City.