Uber and Lyft have reportedly been locking New York City drivers out of their apps to avoid paying millions in wages. Drivers experience lockouts with messages indicating they are “unable to go online” or suggesting they move to busier areas, resulting in downtime that lasts for minutes or hours.
According to a Bloomberg report, the lockouts are an effort to make Uber and Lyft drivers look more active, which could save the companies nearly $30 million in wages by convincing the city not to increase a critical part of the minimum wage formula during its annual review.
The frequent and unannounced lockouts have left drivers in New York City struggling to support their families, according to the report. In response to these issues, Uber and Lyft have claimed that they must “limit access” due to regulations from the city’s Taxi and Limousine Commission.
Uber spokesperson Josh Gold made a statement concerning this issue by saying that: “Bloomberg’s characterization of lockouts as a loophole is inaccurate and we’ve asked for a correction”.
He then added that: “The truth is lockouts have been a terrible but intentional feature of the pay rule since the TLC passed it in 2018, which is why we’ve said for years that the TLC should ditch this outdated approach”.
The TLC’s minimum pay rule for rideshare drivers isn’t a fixed rate but a complex formula that factors in trip time and passenger interaction. A key element is the utilization rate, currently set at 58%, indicating that drivers spend 58 out of every 100 minutes with passengers. If the TLC were to increase this rate, the minimum fares would decrease, requiring rideshare companies to compensate drivers to meet the minimum pay standards.
When drivers were locked out of the app, downtime was not recorded, resulting in unpaid hours. According to the report, this allowed Uber and Lyft to avoid compensating drivers for the time they were unable to work.
Lyft spokesperson CJ Macklin remarked that: “The current pay formula still requires lockouts, which means drivers continue to see limits on when they can earn, riders are still waiting longer to get to where they need to go, and Lyft can’t serve New Yorkers in the way they are expecting”. He added, “This poor experience is why we don’t deploy lockouts anywhere else except in this unique situation, and it’s why we need a long-term fix”.
The lockouts impacted over 800 drivers and occurred at various times throughout the day, as revealed by Bloomberg’s analysis of more than 5,300 screenshots and interviews with approximately 120 drivers.
Uber and Lyft asserted that they disliked the lockouts but implemented them due to TLC regulations. However, Bloomberg’s investigation countered this claim, stating that the companies enforced lockouts to prevent a decrease in the utilization rate during the annual review. A mere 1% drop in this rate could cost the companies an additional $29 million in driver payments.
Since early September, the lockouts appear to have ceased thanks to a private agreement involving rideshare companies, the mayor and the TLC. Furthermore, the New York Taxi Workers Alliance claims that this agreement represents collusion and a duopoly aimed at inflating utilization rates artificially prior to the annual review.
