Uber and Lyft Raise Prices in New York City, Citing Wage Law

(Bloomberg) -- Uber is raising prices -- and narrowing some perks for drivers -- in New York City, where a new minimum wage rule is in effect.

Uber Technologies Inc. will increase the price of trips in the city starting Friday in response to the new rule, it said in a statement to Bloomberg. In addition, because the rule requires that drivers be compensated for their return trips after taking riders outside the city, some out-of-town fares will incur a surcharge. A representative of the San Francisco-based company declined to say how much more expensive rides would become.

Lyft Inc. is also raising prices, and also citing the new minimum wage. In an email it sent to drivers Friday, it said that “riders will see increased fares, which may lead to fewer rides as people find alternative ways to travel around the city.” Lyft, too, declined to say how much its prices would rise.

On top of those price hikes, Uber and Lyft passengers in much of Manhattan will start paying $2.75 more per trip, and 75 cents per trip for group rides. Those are separate, state congestion surcharges that a New York Supreme Court judge ruled Thursday could take effect while a challenge from taxi drivers and medallion owners proceeds.

As for its New York City drivers, Uber said, some offers of bonus pay may no longer be available, and starting in May its premium Uber Black service will be restricted to drivers with at least a 4.85 customer rating out of 5. As of September, it will additionally be restricted to those with a vehicle from a narrowed list of options. Passengers will now have five rather than two minutes to arrive at the pickup point, though drivers will get paid more for the time they spend waiting after that.

On the other hand, Uber drivers will get their raise right away. The wage rule, passed in December by the city’s Taxi and Limousine Commission, guarantees drivers minimum gross pay of $27.86 an hour, so that their pay after expenses will be at least $17.22 an hour. Both Lyft and Juno filed lawsuits Wednesday to block the rule. Lyft said in its suit that the rule, which ties minimum pay to how often drivers have a rider in their vehicles, gives “an automatic and perpetual advantage” to Uber, a leader in the app-based ride-hailing industry.

Judge Andrea Masley set a March 18 hearing and in the meantime offered companies the option of placing the additional pay in escrow pending her decision. The Independent Drivers Guild, an advocacy group affiliated with the International Association of Machinists and whose funders include Uber, rebuked the escrow option.

“Shame on Lyft and Juno for prolonging the suffering for their drivers -- thousands of hardworking New Yorkers -- and their families,” the group’s founder, Jim Conigliaro Jr., said in a statement. He said keeping the raise out of those drivers’ pockets would backfire on the companies by creating a “competitive advantage for Uber.”

Lyft, also based in San Francisco, said requiring minimum payments per trip and per hour encourages drivers to focus on shorter trips in more congested areas and makes it harder to offer cheaper fares when there’s less demand.

Still, spokesman Adrian Durbin said, even as it fights the rule in court, Lyft will pay its New York City drivers enough to equal the total amount the rule requires, but on a weekly basis. For some rides, Lyft might pay less than the required minimum, if other rides make up the difference.

Juno didn’t respond to an email seeking comment.

More: New York City Taxi-Surcharge Plan Moves Forward After Ruling

Uber, which isn’t challenging the rule, said Thursday it had told the court “that we do not intend to hold back any portion of drivers’ earnings.”

The minimum-wage rule is part of Mayor Bill de Blasio’s effort to cap the growth of the app-based car services and reduce traffic congestion.

The Lyft case is Tri-City LLC v. New York City Taxi and Limousine Commission, 151037/2019. The Juno case is Omaha LLC v. New York City Taxi and Limousine Commission, 650574/2019. Both are in New York State Supreme Court (Manhattan).

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