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Lyft and Juno sue NYC over driver pay rules

The ride-hailing companies say new minimum-wage calculations give Uber an unfair advantage. But drivers aren't happy about the lawsuits.

New York City passed a law in August to ensure all ride-hail drivers are paid at least minimum wage. It was set to go into effect on Friday, but ride-hailing companies Lyft and Juno are trying to get it delayed.

The two companies filed separate lawsuits in New York County Supreme Court on Wednesday arguing the minimum-wage pay rate calculated by the city's Taxi and Limousine Commission, TLC, gives Uber an unfair advantage.

"Our lawsuit does not target the law passed by City Council, but instead addresses the specific way the TLC plans to implement the rules, which would advantage Uber in New York City at the expense of drivers and smaller players such as Lyft," Lyft spokeswoman Campbell Matthews said in an email. "It's no secret that Uber has tried to put us out of business in the past. They've failed repeatedly, and the TLC should not assist them in their efforts."

This position isn't popular among drivers, however. The Independent Drivers Guild, which represents more than 70,000 ride-hail drivers in New York City, said it believes these lawsuits are just a ruse to not pay drivers more.

"The idea that this lawsuit is about anything other than avoiding paying drivers a fair wage is laughable," Jim Conigliaro Jr., founder of the Independent Drivers Guild, said in a statement. "Lyft has had every opportunity to pay a livable wage and they refused to do so -- and now that we won a legal mandate, they are still refusing to pay a fair wage."

New York was the first city in the country to pass a law with minimum-wage requirements for ride-hail drivers. While taxi companies have long had to follow rules that dictate driver pay, the app-based ride-hailing world is still evolving. The TLC said its new wage rules will give the typical Uber, Lyft or Juno driver a pay raise of nearly $10,000 per year.

The TLC's calculations for minimum-wage pay equals $17.22 per hour, which includes $15-per-hour minimum wage and extra for drivers' gas and car costs. The number is based on drivers' miles traveled plus time driving, which is then divided by "utilization rate." The utilization rate is the amount of time drivers have a passenger in the car.

Lyft said Uber could have a higher utilization rate than its competitors because it's the bigger and better known company. This means the TLC's calculations give it an advantage, Lyft said, because it can pay lower rates, charge passengers less and then take up even more of the city's market share.

Uber declined to comment on these allegations.

Uber and Lyft are gunning for initial public offerings this year. Both companies aim to show investors they have profitable businesses that can grow. Uber appears to be showcasing itself as a global company with diverse features such as food delivery and flying cars. Lyft, which is smaller with services only in the US and Canada, seems to be focusing on being a stable company with ride-hailing as its core business.

Juno didn't immediately provide a comment.

Update: A New York State Supreme Court Judge responded to the Juno and Lyft lawsuits late Wednesday, ruling that the companies could opt to put into escrow the money set to go to drivers starting Friday, until a follow-up hearing scheduled for March 18. Drivers have asked the companies to agree to pay no less than the new minimum way starting Friday as planned.

First published Jan. 20, 3:56 p.m. PT.
Update, 5:24 p.m.: Includes information on the judge's ruling.

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