New York judge dismisses Lyft's challenge of driver wage rules

Dive Brief:

A New York state judge has dismissed Lyft’s challenge of New York City’s minimum wage rules for ride-hailing drivers, according to the New York Daily News.
Lyft, in a joint petition with Juno, had challenged the pay rules in January, saying that the city’s reliance on a utilization rate to determine driver pay would disproportionately favor Uber. Because Uber is the largest provider in the city and can keep its cars occupied more consistently, Lyft argued that it would effectively set the market and drive competitors out of business.
In a press statement, Lyft said it does not reject the need for better driver pay, but would continue fighting the city’s policy. “The [Taxi and Limousine Commission’s] rules have hurt earning opportunities for drivers and will diminish competition that benefits drivers and riders,” a spokesman said.

Dive Insight:

New York’s first-in-the-nation minimum wage rules have already roiled the ride-hailing market, with Uber and Lyft both suspending new hires in the city. (By limiting new hires, both companies could help improve their utilization rate.) Jim Conigliaro Jr., founder of the Independent Drivers Guild, applauded the dismissal of Lyft’s petition, saying, "if ride hail companies want to operate in New York City, they need to pay drivers fairly and follow our minimum wage laws."

“By upholding this law, the courts today ensured that the more than 70,000 drivers and their families who have been struggling to get by on less than minimum wage for years will finally have the certainty of a decent wage,” he added in a statement.

Despite Lyft’s concerns that it could get rolled by Uber, the Daily News reported last month that the company’s market share grew in February under the first month of the wage rules. Lyft rides were 23% of app-based for-hire rides that month, up from 21% in January, while Uber remained flat at 67%.

With both Lyft and Uber going public this year, there has been increased attention on driver pay and benefits. Other cities, including Seattle and San Francisco, are exploring their own wage rules, and the companies could also find themselves subject to shareholder pressure on the issue.