(Bloomberg) -- New York City Comptroller Brad Lander called for changes to city regulations that would end app lockouts, a practice that Uber Technologies Inc. and Lyft Inc. have used to game the city’s minimum wage law, saving tens if not hundreds of millions in future driver pay.
Lander, a former city councilor who sponsored the minimum-wage bill when it was introduced in 2018 and is running for mayor, said Uber and Lyft have found a way “to exploit a loophole in the law and to go back to their old habit of exploiting drivers to pad their billion-dollar profits.” He cited a Bloomberg investigation published last week that found the lockouts — which temporarily prevent drivers from logging into the apps so they can’t work — are unpredictable and widespread, and have inflicted significant financial and mental strain on workers.
“I am committed to working together with the Taxi Workers Alliance, with council members, with drivers, and with other advocates to change the Taxi and Limousine Commission rules and pass any city council legislation that will close this loophole,” said Lander, who was flanked by representatives from a drivers union, the New York Taxi Workers Alliance, and council member Shahana Hanif.
At the heart of the issue is a six-year-old minimum pay rule — the first in the nation designed for rideshare drivers. The policy was designed so that drivers could make a living wage for the time they’re available for work, even if that’s without a passenger in their car.
Instead of increasing the amount of time drivers spend with passengers by managing driver onboarding, which Lander said the law had intended to encourage, Uber and Lyft locked out drivers instead. That effectively erased some of their working time from the record before the citywide minimum pay for drivers is expected to be recalculated early next year.
“Unfortunately, TLC did not take responsibility for managing onboarding,” he said. Instead, he said a loophole allowed for companies to have “too many drivers” and use lockouts “as a way of limiting their liability.”
A representative for New York City’s Taxi and Limousine Commission didn’t respond to a request for comment.
Uber spokesperson Josh Gold said “lockouts are now only needed in times of low demand — in fact, NYC drivers took home more money, spent more time online and did more trips on average while lockouts took place compared to the same period a year ago.”
Bloomberg’s investigation found lockouts happened nearly every hour of the day, even in busy places — like airports and the area near the US Open tennis tournament — where consumers are charged higher “surge” pricing because of low driver availability. The report relied on data from hundreds of Uber and Lyft drivers collected between Aug. 14 and Sept. 8.
Uber’s Gold didn’t respond to a question on whether the comptroller or TLC has engaged the company to discuss the new rules.
Lyft spokesperson CJ Macklin said the company would support a minimum earnings standard that doesn’t include the utilization measurement, which forces the lockouts. That element of the current rule measures how often drivers have — and don’t have — trips. Lyft wants “to work with the city on a solution that could work for everybody,” Macklin said.
Lander, whose current responsibilities include ensuring transparency and accountability in setting and enforcing wage laws, sent a letter to the taxi commission on Sept. 30 asking for data to understand the scope and impact of the lockouts. In the letter, which Bloomberg obtained through a public records request, he asked for individualized trip statistics collected from the rideshare companies, along with driver income data for June to August, and urged the regulator to “use accurate data to recalibrate driver pay rates if the current system is found to be flawed.”
Uber stopped performing lockouts in early September and has disputed the characterization of lockouts as a loophole, saying it’s a feature of the law and that it presents the company with the choice of locking out drivers or kicking some of them off the platform permanently.
Lyft also blames the law for necessitating lockouts, which the company continues to use today, and wants the city to explore another pay model. The company unsuccessfully sued in 2019 to block the current rule.
On Thursday, Lander said the commission has acknowledged receipt of the letter and that he expects to obtain the requested data by the deadline near the end of the month. The data will be needed to help inform the development of new policies to “restore the basic intent” of the 2018 law.
(Updates with comments from Uber starting in eighth paragraph.)
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