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New York City Sets Minimum Wage for Independent Contractors of Ride-Hailing Companies

On December 4, 2018, New York City’s Taxi and Limousine Commission (“TLC”) voted to require ride-hailing companies operating in New York City to compensate its drivers who are treated as independent contractors, and not employees, on a per-minute and –mile payment formula, which will result in a $17.22 per hour wage floor.

This new rule is scheduled to take effect on December 31, 2018.

This new minimum wage for independent contractor drivers who operate vehicles on behalf of ride-hailing companies – including Uber, Lyft, Via, and Juno – will surpass the new $15 minimum wage for many New York City-based employees, which will also take effect on December 31, 2018.

This appears to be the first time a government entity has imposed wage rules on privately owned ride-hailing companies.

The main reason for this new requirement is that independent contractor drivers are often required to cover their own expenses that affects their hour wages.

Prior to this rule, ride-hailing app-based drivers were reportedly paid an average of $11.90 per hour (after deducting expenses), which resulted in drivers complaining of severe financial hardship. According to TLC Chair Meera Joshi, this rule would increase driver earnings by an average of $10,000 a year. Joshi also stated that traditional yellow taxicab drivers already earn on average at least $17.22 per hour pursuant to separate regulations.

The wage requirement is expected to have far-reaching repercussions, including:

  • Fare hikes by Uber that may result in customers using New York City yellow taxicabs and Boro Taxis, particularly given the rise of apps that allow riders to hail taxis from their phones, similar to Uber, Lyft, Via, and Juno.

  • Passage of similar minimum wage protections in other locales with a large population of ride-hailing drivers, such as San Francisco.

  • To avoid paying the higher wage prescribed by the rule, Uber, Lyft, Via, and Juno may consider reclassifying their for-hire vehicle drivers as employees, as the new minimum wage rule applies only to drivers who are independent contractors. However, it is anticipated that these companies will conclude that the others costs of employing drivers, such as providing employee benefits, would outweigh the costs of paying drivers the newly instituted minimum wage.

©2018 Epstein Becker & Green, P.C. All rights reserved.

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About this Author

Jeffrey H. Ruzal, epstein becker green, new york, fair labor, employment
Member

JEFFREY H. RUZAL is a Member in the Labor and Employment practice, in the New York office of Epstein Becker Green.

Mr. Ruzal's experience includes:

  • Representing employers in employment-related litigation in federal courts and before administrative agencies

  • Representing employers in the defense of putative collective actions under the Fair Labor Standards Act and class actions under the New York State Wage and Hour Law

  • ...

212-351-3762
Carly Baratt, Epstein Becker Law Firm, New York, Health Care, Labor and Employment Litigation Attorney
Associate

Carly Baratt is an Associate in the Employment, Labor & Workforce Management and Litigation & Business Disputes practices, in the New York office of Epstein Becker Green.

Ms. Baratt:

  • Represents clients in employment-related litigation on a broad array of matters, including claims of discrimination, harassment, retaliation, wrongful termination, and breach of employment contract

  • Counsels clients in the health care and financial industries through a range of investigations and enforcement proceedings brought by federal and state agencies, including the U.S. Department of Justice, the Securities and Exchange Commission, the Financial Conduct Authority, the Financial Industry Regulatory Authority, the Commodity Futures Trading Commission, the Office of the Special Inspector General for the Troubled Asset Relief Program, the New York State Department of Financial Services, the New York State Office of the Attorney General, the U.S. Department of Labor, the U.S. Department of Health and Human Services’ Office of Inspector General, and the Federal Transit Administration

  • Represents clients in actions involving residential mortgage-backed securities; securities, accounting, bank, or health care fraud; and violations of the Foreign Corrupt Practices Act

  • Defends clients in False Claims Act and Anti-Kickback Statute cases (including qui tam litigation)

212-351-4674