Uber, Lyft avoided millions in pay by locking NYC drivers out of apps: report
Uber and Lyft have been locking New York City drivers out of their apps to avoid paying millions of dollars in pay, according to a report.
Rideshare app drivers have been getting locked out of the two apps – with messages that flash “unable to go online” or tell drivers to go to a busier location – for minutes or hours at a time.
The lockouts are an attempt to make Uber and Lyft drivers seem busier on paper – which could save the companies nearly $30 million in pay by convincing the city not to raise a key portion of its minimum wage formula during its annual review, according to a Bloomberg report.
The frequent lockouts – which come without warning – have left Big Apple drivers scrambling to support their families, the report said.
Uber and Lyft have told drivers they are forced to “limit access” because of rules from New York City’s Taxi and Limousine Commission.
“Bloomberg’s characterization of lockouts as a loophole is inaccurate and we’ve asked for a correction,” Uber spokesperson Josh Gold told The Post in a statement.
“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of the pay rule since the TLC passed it in 2018, which is why we’ve said for years that the TLC should ditch this outdated approach.”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 is not a fixed rate, like some other laws, but rather a complex formula that considers factors like trip time and time spent with passengers.
A key facet of the minimum pay rule is the utilization rate, which is a measure of how much time drivers spend with passengers.
The current rate is 58%, which assumes that for every 100 minutes a driver works, 58 of those minutes are spent with a passenger while the rest is spent searching for rides.
The higher the utilization rate, the lower the minimum fare for each ride.
If the TLC raised the rate, for example, the fares would go down and the companies would be forced to make up the difference from that loss to meet the minimum pay rules for drivers.
Rideshare drivers are supposed to be paid for the time they spend driving around in-between rides.
When drivers were locked out of the app, that in-between time was not being tracked – and they were not being paid for it. So Uber and Lyft were able to avoid paying drivers for this downtime, the report said.
“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,” Lyft spokesperson CJ Macklin told The Post in a statement.
“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.”
Drivers would have to spend more hours on the road to make up for the lost earnings during the unannounced and, at times, lengthy lockout periods.
The lockouts occurred at nearly every hour of the day and affected more than 800 drivers, according to Bloomberg’s analysis of more than 5,300 screenshots and interviews with about 120 drivers.
When the lockouts occurred during peak times, fares would spike because there was a smaller supply of available drivers.
Dozens of rideshare drivers – who work as independent contractors, not company employees – missed tax, auto loan, rent and credit card payments, the investigation found.
“This is like a monkey business,” rideshare driver Mohamed Mohamed, who uses both Uber and Lyft, told Bloomberg. “You are ready to work, and they tell you no, you’re not going to work now. Many days I feel depressed.”
Michael Reich, a labor economics professor at University of California, Berkeley, helped design the city’s pay model.
“It’s outrageous, it’s stressful and it’s unprecedented, as far as I know, in the history of labor to just tell people there’s no notice that, ‘You have to leave,’ and not tell them when you can come back,” Reich told Bloomberg. “I have never heard such behavior that’s so dismissive and disrespectful of these workers.”
“We are taking steps to increase utilization, just as his paper called for,” Gold told Bloomberg.
Former taxi drivers who had left the industry in favor of Uber and Lyft – which promised flexible hours, which allowed drivers to stop home during pick-up times for their children – found themselves suddenly unable to support their families.
Not only were the lockouts unpredictable, the guidance that followed was similarly wacky.
Uber would show locked-out drivers “open access” times – odd hours early in the morning and late at night – but Bloomberg’s investigation found a significant share of drivers were locked out of the apps during those times, as well.
Some Lyft drivers were even locked out in New Jersey, where New York City’s minimum pay rule does not apply.
Uber and Lyft claimed they did not like the lockouts and had to issue them because of the TLC’s law.
But the Bloomberg investigation said this was false.
Rather, Uber and Lyft were instituting lockouts so the TLC would not drop the utilization rate during its annual review – since just a 1% drop would require the companies to pay an extra $29 million in pay for drivers.
Since early September, the lockouts have seemingly ended because of a private agreement between the rideshare companies, the mayor and the TLC, the report said.
But New York Taxi Workers Alliance has claimed the private agreement is an instance of duopoly and collusion to artificially inflate utilization rates ahead of the annual review.
