In 2024, drivers for Uber and Lyft in New York City were caught off guard when, departing for their shifts, they opened their phones and saw that they had been locked out of the apps.
Pop-up messages from the companies informed the drivers that they had been denied access, and that they should try again at a busier time or in a busier area. The messages cited pay regulations imposed by the Taxi and Limousine Commission, the city agency that oversees ride-hail companies, as the reason the drivers couldn’t work.
The lockouts, which were first reported in a Bloomberg investigation last year, had been imposed so that the companies could avoid paying drivers more, according to the commission. They were instituted randomly and kept drivers off the road for up to several hours at a time. Drivers said the lockouts forced them to work more to recoup their losses.
On Wednesday, the taxi commission voted unanimously to restrict the lockouts. Under new amendments adopted by the agency, Uber and Lyft can still impose lockouts, but they must give at least 72 hours’ notice to the affected drivers. And the companies can’t lock out drivers for at least 16 hours once they start accepting trips. Uber and Lyft face a $500 fine for each rule violation.
The updated protections, which also include a 5 percent pay raise for drivers, go into effect on Aug. 1.
The commission’s decision comes after months of conflicting campaigns by drivers’ unions and ride-share companies to amend its rules. Unions held protests against the lockouts last year outside the commission’s office in Queens and Uber’s headquarters in downtown Manhattan. In November, Uber lobbied to decrease its drivers’ pay, saying a wage increase would mean higher costs for customers.
The lockouts were a response to pay laws that the commission established in 2019, after discovering that 85 percent of ride-share drivers made less than minimum wage.
The laws mandated that ride-hailing apps pay their drivers for every hour spent on the road. They also declared a minimum per-trip payment that drivers would receive for each ride, based on a formula that factors in the distance of the trip, how long it takes and the percentage of a driver’s overall driving time spent with passengers.
That last percentage determines what is known as Uber’s or Lyft’s “utilization rate.” The commission’s laws require that drivers spend more than 53 percent of their time on the road with passengers. If a driver fails to do that, the company’s utilization rate decreases. And the lower the rate, the higher the amount that Uber and Lyft are obligated to pay their drivers.
But the two companies found a workaround, the commission said. Instead of paying drivers more, they locked them out of the apps without warning, limiting the amount of time drivers were working and deflating the number of drivers on the road.
David Do, the chair of the commission, said on Wednesday that Uber and Lyft were “exploiting loopholes in our rules to artificially increase utilization rates to avoid paying drivers more,” calling the practice “unacceptable.”
Ride-hailing companies argued that the 2019 minimum payment laws made the lockouts necessary.
In a statement, Uber said that its full-time drivers still earned an average of $75,000 a year, despite the lockouts.
A spokesman for Lyft said the commission’s changes were “a step in the right direction,” but that the company was still concerned that the pay formula would “deprive drivers of earning opportunities, drive up prices for riders and reduce ride availability, which isn’t good for anyone.”
Bhairavi Desai, the executive director of the New York Taxi Workers Alliance, the union that organized some of last year’s protests, lauded the new rules but said that “we still have a lot more work to do to protect job security and incomes for Uber and Lyft drivers.”
“The adjustment in pay is nominal,” Ms. Desai said.
The commission’s move to prevent the apps from weakening pay laws, she added, was the “real victory.”
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