NYC Approves Minimum Wage for Ride-Hailing Drivers

The New York City Taxi and Limousine Commission (TLC) voted this week to create an hourly minimum wage for drivers of app-based ride-hailing services in the city—the first such measure in the U.S.

Under the new rules, drivers will receive at least $17.22 per hour after expenses such as fuel and tolls, whether or not they have a passenger. As a result, the commission estimates that the average pay of the 80,000 ride-hailing drivers in the city will jump by about $9,600 per year.

Ride-hailing drivers had been considered as independent contractors that don’t qualify for New York City’s $15 employee minimum wage and don’t receive benefits such as healthcare or paid vacations. Such drivers currently are paid an average of less than $12 per hour, net expenses.

The new rules are based on a formula that incorporates mileage, time and rider utilization rate (which currently averages less than 60%). In addition, drivers will receive a premium for carrying multiple passengers and rides that take them outside the city to compensate them for riderless return trips.

To help monitor and enforce the new policy, ride-hailing companies will be required to provide TLC with detailed fare information, more extensive trip data, and information about passenger wait times. The organization’s website also will provide a wage calculator for drivers.

The four largest ride-hailing companies in New York—Uber, Lyft, Gett/Juno and Via—account for about 75% of the local market, according to TLC. The companies claim that the new rules ignore current driver bonus programs and will lead to “higher than necessary” fare increases.