Uber files lawsuit to block NYC driver pay increase

The company reportedly indicated in its lawsuit that it would have to raise fares if drivers get an increase in pay.

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Back in November, New York City's Taxi and Limousine Commission (TLC) voted to increase the pay rates of Uber and Lyft drivers to make up for the rise in inflation and and operational costs. The new rates were supposed to be implemented on December 19th, but now Uber has sued the commission to block the new rates from taking effect. According to Bloomberg, Uber said in its lawsuit that it would have to spend an additional $21 million to $23 million a month if the new rates are implemented and that it wouldn't be able to recover those costs without raising fares.

To note, drivers' per-minute rates are going up by 7.18 percent and per-mile rates by 16.11 percent under the new rules. That means for a 7.5-mile trip that takes 30 minutes, a driver would earn at least $27.15, which is $2.50 more than current rates. The drivers are also getting another pay bump in March 2023, based on inflation rates comparing December's to September's this year. A company spokesperson told Engadget that by increasing drivers' pay this December, TLC is locking in "this summer's high gas prices in perpetuity."

Freddi Goldstein, Uber spokesperson told us:

"With this latest rulemaking, on top of the annual inflation adjustment, the TLC is choosing to invent a new methodology that locks in this summer’s high gas prices in perpetuity with a ‘mid-year’ adjustment that takes place 12 days before the end of the year. The TLC should have followed its usual annual adjustment and instituted a temporary gas surcharge when gas prices were actually elevated."

The company's lawsuit seems to indicate that it intends to pass the costs associated with drivers' pay increase to riders. "Such a significant fare hike, right before the holidays, would irreparably damage Uber’s reputation, impair goodwill, and risk permanent loss of business and customers," its lawsuit said. In a strongly worded response to the lawsuit, TLC said acknowledged that Uber already charges 37 percent more today compared to 2019, but it said that the company is keeping money earned from fare hikes over the past few years to itself.

The commission's statement reads: "Just in time to steal Christmas from New York families, Uber is suing to stop the raise the TLC enacted for app drivers after months of public hearings, years of stalled wages, and the pandemic decimating incomes. Uber's Grinch move is on top of denying a fuel surcharge to only NYC drivers when costs skyrocketed due to record high inflation, forcing drivers in one of their most profitable markets to choose between groceries and fueling up.

Uber is already charging passengers 37% more today compared to 2019 AND KEEPING IT FOR THEMSELVES but says this modest raise for drivers is what will break the company. Shame on you, Dara Khosrowshahi. We call on the City to stand firm and defend the rights of drivers to labor with dignity. Uber seeks chaos. We seek dignity. We are confident we will prevail."

The ride-hailing giant is now asking the court to declare the new pay rates as invalid and to prevent the first increase's implementation this month while the lawsuit is ongoing.

UPDATE 12/10/22 10:53AM: Uber clarified that it's had rate hikes over the past years and that the per-minute increase is 7.18 percent, while the per-mile is 16.11 percent. We also added the company's official statement.

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