Lyft and another Uber competitor are suing New York City after new minimum wage requirements for drivers

Lyft Logan Green Ride-sharing service Lyft CEO Logan Green speaks during a session at the South by Southwest (SXSW) interactive, film and music conference in Austin, Texas March 16, 2015.Laura Buckman/Reuters

  • Lyft and Juno are suing New York City over a minimum wage law for drivers that's set to take effect on Friday. 
  • The companies, both Uber competitors, say the rule is "inherently flawed and fundamentally unfair."
  • As it stands, the rule would guarantee drivers at least $17.22 per hour after expenses. 

Ride-hailing drivers in New York City are set to get a legally-guaranteed minimum wage on Friday, but new lawsuits filed Wednesday from two Uber competitors could put a wrinkle in their raise.

Juno and Lyft say the minimum wage of $17.22 (after expenses) that was approved by the city council in December will make it impossible for their companies to compete with Uber, which still  has the upper hand in most of the country including New York, the US' largest ride-hailing market.

"Although the TLC's professed goal of ensuring that FHV drivers are paid fairly is well-intentioned in theory - and, indeed, the very goal upon which Juno has modeled its business - the mechanism by which the TLC has committed to do so is inherently flawed and fundamentally unfair," the lawsuit from Juno reads.

Lyft, which filed its similar lawsuit shortly after Juno, is not trying to stop the entire law, a spokesperson pointed out. Rather, the heart of the issue lies in a relatively complicated minimum wage formula that is calculated based time, mileage, and an industry-wide "utilization rate."

"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," spokesperson Campbell Matthews said in an emailed statement. "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."

The formula was codified following a July report commissioned by the New York City Council from academic researchers James Parrott and Michael Reich. It found the median Lyft driver takes home $13.85 per hour - about 24% lower than the floor that would take effect Friday. Juno drivers were above the minimum, at $18.26 per hour.

At the crux of Lyft's argument is a detail in the rule which says the minimum wage must be applied on a per-ride basis, as opposed to a weekly basis. Meaning, each ride must pay $17.22 per hour before expenses, as opposed to all rides over a span of multiple days paying out to that amount.

"There is no support in the administrative record before the TLC for requiring the calculation of river earnings on a per-trip basis to the exclusion of a per-week calculation option," Lyft's lawsuit reads. "The per-trip calculation requirement was essentially plucked out of thin air by the TLC, with no support from Parrot and Reich and no analysis of its effects."

Most ride-hailing firms, Uber included, have faced backlash from drivers over low pay and a lack of benefits that would come from being classified as employees rather than independent contractors.

New York City Mayor Bill de Blasio was quick to come to their support, tweeting that the lawsuits were "unconscionable."

"The Rule actually will harm the very drivers it ostensibly was designed to protect, and adversely impact passengers by eliminating healthy competition in the industry," Juno's lawsuit reads. "The Rule is arbitrary and capricious and should be annulled for at least the following separate and independent reasons."

Uber and Juno did not immediately respond to requests for comment from Business Insider. A court hearing is set for 2 p.m.

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