Judge dismisses Lyft's minimum-wage lawsuit in NYC

Lyft complained wage formula favored Uber

By Sara Ashley O'Brien, CNN Business
Lyft/CNN

(CNN) - A New York State judge has denied and dismissed a Lyft lawsuit challenging the implementation of the first-of-its-kind minimum wage law in New York City.

Lyft sued the New York City Taxi and Limousine Commission at the end of January over the minimum-pay formula behind a new law that went into effect on February 1. The law requires drivers for ridehailing companies like Uber and Lyft earn a minimum take-home wage of $17.22 per hour.

One of Lyft's chief complaints was that the formula for the minimum-wage amount, which was voted on by the TLC, favors the company with the biggest marketshare: Uber.

Supreme Court Judge Andrea Masley ruled against Lyft, according to a copy of the court filing signed this week. Masley upheld the original minimum-pay formula.

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

The company declined to comment further on the matter.

The $17.22 amount is the ridehailing equivalent of a $15 minimum wage. It was calculated to account for the fact that drivers have to cover payroll taxes and don't get paid time off. The wage also takes into account expenses drivers incur, such as fuel. The move would raise the average driver's pay by $9,600 per year, according to the proposal.

Lyft has stressed it does not take issue with the minimum-wage law itself but rather the implementation of it. It argues that the formula — which takes into account a "utilization rate" based on how often drivers on a platform have a customer in their car — makes it more difficult for smaller companies to compete on ride pricing and payment for drivers. Lyft has said it could result in decreased service to less populated areas.

"Lyft's fear of Uber domination based on a better [utilization rate] is factually incorrect. Indeed, it is possible for a smaller company to beat Uber in the [utilization rate] category, using a different business model focused exclusively on shared rides," the court decision reads.

When the minimum-wage law went into effect, Uber and Lyft said customers would have to pay more for their rides as a result. However, Uber did not contest the law's implementation.

Meanwhile, as the lawsuit awaited a decision in court, Lyft made its Wall Street debut on March 29. Its stock has struggled, though, as Uber, the industry behemoth, gears up for its own IPO expected later this month.

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