In November, the New York Taxi and Limousine Commission (TLC) vote increase pay rates for Uber and Lyft drivers to offset rising inflation and operational costs. The new fares were supposed to be implemented on December 19, but now Uber has sued the commission to prevent the new fares from taking effect. According BloombergUber said in its lawsuit that it would have to spend an additional $21 million to $23 million per month if the new fares were implemented and that it would not be able to recoup those costs without raising fares.
Of note, driver minute rates increase by 7.18% and mile rates by 16.11% under the new rules. This means that for a 7.5 mile trip that takes 30 minutes, a driver would earn at least $27.15, or $2.50 more than current rates. Drivers also receive another pay rise in March 2023, based on inflation rates comparing December to September of this year. A company spokesperson told Engadget that by increasing driver pay in December, TLC is locking in “this summer’s high gas prices in perpetuity.”
Freddi Goldstein, spokesperson for Uber told us:
“With this latest regulation, in addition to the annual inflation adjustment, the TLC chooses to invent a new methodology that locks in high gas prices in perpetuity this summer with a ‘mid-year’ adjustment. which takes place 12 days before the end of TLC should have followed its usual annual adjustment and instituted a temporary gas surcharge when gas prices were in fact high.
The company’s lawsuit appears to indicate that it intends to pass on the costs associated with the driver’s salary increase to passengers. “Such a significant fare increase just before the holidays would irreparably damage Uber’s reputation, harm goodwill, and risk permanently losing business and customers,” its lawsuit said. In a forceful response to the lawsuit, TLC said Uber was already charging 37% more today than in 2019, but said the company was keeping money earned from fare hikes in recent years to itself. .
The Commission statement bed: “Just in time to steal Christmas from New York families, Uber is suing to stop the TLC increase enacted for app drivers after months of public hearings, years of locked-in wages and the pandemic decimating revenue Uber’s Grinch movement is above denying a fuel surcharge only to drivers in New York when costs soared due to record inflation, forcing drivers in one of their markets the most profitable to choose between groceries and refueling.
Uber is already charging riders 37% more today than in 2019 AND KEEPING IT FOR THEMSELVES, but says this modest increase for drivers is what will break the business. Shame on you, Dara Khosrowshahi. We call on the City to stand firm and defend the rights of drivers to work with dignity. Uber seeks chaos. We seek dignity. We are convinced that we will win.”
The ride-sharing giant is now asking the court to declare the new pay rates invalid and prevent the first increase from being implemented this month while the trial is ongoing.
UPDATE 10/12/22 10:53: Uber clarified that it has had fare increases over the past few years and the increase per minute is 7.18%, while the per mile is 16.11%. We’ve also added the official company statement.
All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you purchase something through one of these links, we may earn an affiliate commission. All prices correct at time of publication.