Lyft just lost its lawsuit against New York City's minimum wage rule for drivers

Graham Rapier

May 1, 2019, 23:04 IST

Lyft just lost its lawsuit against New York City's minimum wage rule for drivers

Mario Tama/Getty Images
Lyft CEO Logan Green (R) and President John Zimmer (LEFT C) gather before the Nasdaq opening bell celebrating the company's initial public offering (IPO) on March 29, 2019 in Los Angeles, California.

Lyft has lost its lawsuit challenging New York City's minimum wage for ride-hailing drivers.
The company, along with competitor Juno, originally filed a lawsuit against the $17.22 per hour minimum in January.
Lyft argued that the "utilization rate" used to calculate pay gave Uber an unfair advantage.

New York City's minimum wage law for ride hailing drivers, the first law of its kind in the country, was struck down by a state judge on Wednesday.

Judge Andrea Masley ruled that the lawsuit, originally filed by Lyft in January (another similar suit was filed by Juno, which is owned by Gett, at the same time) was not sufficient to overturn the rule, which took effect in February. The companies have argued that the formula that calculated driver pay using what's called a utilization rate unfairly benefits Uber.

A Lyft spokesperson passed along the following statement about the ruling:

The TLC's rules have hurt earning opportunities for drivers, and will diminish competition that benefits drivers and riders. We will continue fighting to provide the best experience for drivers and riders in New York City.

The company maintains, as it did at the time of the filing, that it supports paying a living wage to its drivers in New York City. Lyft says drivers will see fewer rides thanks to the decision, which could translate to lower earnings. Since the implementation of the regulations, both Uber and Lyft said they have stopped hiring new drivers in New York City.

Juno did not immediately respond to a request for comment.

Because of its massive size, Uber's higher utilization rate will allow it to gain an unfair advantage once companies are allowed to petition to use their own utilization rate after one year of the rules, the two companies argued in the lawsuit. Until then, all for-hire vehicles must use the industry rate of .58.

Here's the formula the law uses. Lyft has argued that a higher utilization rate, the bottom of the pay calculation fraction, makes it easier for Uber to lower per-mile and per-minute expenses.