Lyft Fails to Prove Uber has Unfair Advantage due to NYC TLC Minimum Pay Calculation

Lyft's case against the Taxi & Limousine Commission (TLC) failed after Appellate Division panel upheld a previous New York State Supreme Court ruling

Photo Credit: Austin Distel

A five-judge Appellate Division panel on Tuesday upheld a previous New York Supreme Court decision, saying in a written decision that the TLC’s minimum pay rate-setting method “has a rational basis and was not unreasonable.” The essence of Lyft’s argument was the minimum pay formula unfairly benefited Uber due its controlling market share. In other words, Uber was able to retain more drivers than Lyft because its trip volumes (more than 2x Lyft in NYC) made it easier for them to satisfy TLC minimum pay rules for a greater number of drivers. As a reminder the minimum pay rules, passed in 2018, set minimum per-trip charges designed to ensure TLC drivers earn at least $17.22 per hour (or $27.86 per hour before expenses).

“Contrary to petitioners’ argument, there is no requirement that TLC articulate its rationale for choosing company-specific utilization rates ... provided that the record reveals that the rule had a rational basis” - NY Appellate Division panel

“The rule has already resulted in 10,000 fewer New Yorkers being able to earn on our platform…We will continue fighting for drivers and are currently exploring all our options.” - Lyft spokesman CJ Macklin 

As the NYC for-hire transportation industry attempts to stabilize after one of the most disruptive periods in its history, I believe you will see the rise of Uber-only and Lyft-only drivers (this has already happened to a large extent). The minimum pay rules, in many ways, did help bring about this dynamic as Uber and Lyft needed to ensure any driver on their respective platforms were given enough work to meet the minimum pay standards. This is why both Uber and Lyft stopped accepting new NYC drivers in April 2019 and began giving preference to full-time single platform TLC drivers (i.e. drivers with a large amount of single platform (only Uber or only Lyft) completed trips were given preference in Uber’s driver scheduler or Lyft’s Driver App). One could argue that this may solidify status quo market share positions as it will be harder for Lyft to effectively add more TLC drivers in its NYC business. However, if Lyft is able to gain more trip volumes it could chip away at Uber’s dominance. It will be harder though as a driver will hesitate to leave a platform that he or she has preferential treatment with unless pay significantly improves by switching.

Link to article

The TLC Market Newsletter is written by Dawood Mian, Founder & CEO of TLC Market. He covers the NYC ridesharing industry and related news. Search TLC Market for cars, parts, tires, mechanics, reviews & more. Find great deals at TLCMKT.COM.