Uber files lawsuit to block NYC driver pay increase

Uber Technologies Inc. has sued the New York City Taxi & Limousine Commission to block an increase in rates it must pay drivers that was approved last month, calling them “dramatic, unprecedented and unsupported hikes.”

The commission on Nov. 15 approved the first increase in metered fares since 2012, including increases in per-mile and per-minute rates for Uber and Lyft Inc. drivers. In a lawsuit filed on Friday in New York state court, Uber said it would be forced to spend an additional $21 million to $23 million a month if the rule goes into effect on Dec. 19, which it wouldn’t be able to recover unless it raised rider fares.

“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,” Uber said in its suit. The company said the commission suddenly switched to a “volatile inflation index for a one-time increase that makes no sense, and that is a drastic departure from the Commission’s past practice or any rational approach.”

Taxi & Limousine Commissioner David Do said in a statement that the city must “stand behind our workers without traditional employment protections.”

“New York City leads the nation in protecting drivers, and this important rule reflects that reality,” Do said. “We are confident that we are well within our legal authority in implementing this important rule, and we are vigorously fighting this lawsuit.”

The potential for the additional cost to be passed down to riders comes at a time when prices for ride-hailing are still at historical highs. The cost of an Uber ride was 37% higher in September compared to 2019, according to data analytics firm YipitData. In November, Uber Chief Executive Officer Dara Khosrowshahi told Bloomberg he thinks elevated prices may be here to stay.

“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,” an Uber spokesman said in a statement. He added that the TLC “should have followed its usual annual adjustment and instituted a temporary gas surcharge when gas prices were actually elevated.”

The 37% hike in fares since 2019 is going into Uber’s coffers, and not to the drivers, said Bhairavi Desai, executive director of the New York Taxi Workers Alliance.

“We call on the city to stand firm and defend the rights of drivers to labor with dignity,” Desai said in a statement. “Uber seeks chaos. We seek dignity.”

According to the city, Uber and Lyft driver pay rates will increase by 7% per minute and 24% per mile, with a sample trip of 30 minutes and 7.5 miles requiring a minimum payment of $27.15. Uber said the city’s calculation of the per mile rate increase is misleading and is actually 16% because it ignores mandated annual adjustments implemented in 2020 and 2022.

The suit is seeking a court order declaring the increases invalid and to block their implementation while the litigation proceeds.

The case is Uber USA LLC v. New York City Taxi & Limousine Commission, 160451/2022, New York State Supreme Court, New York County (Manhattan).