Uber And Lyft Are Changing In Their Other Stronghold, Too: New York City

Following California’s approval of new gig-industry limitations, Uber and Lyft have made news with a variety of steps and statements geared toward their industry’s future.

Meanwhile, in the firms’ other US stronghold, New York City, the companies are continuing to roll out new ways of putting drivers to work, and facing push-back from drivers for their response to city regulations.

Earlier this month, California’s state assembly voted to approve Assembly Bill 5 (or AB5), which establishes a three-point system for classifying California workers as either employees or independent contractors. The legislation has long been seen as a threat to most ride-hail companies’ way of doing business, which uses technology to on-board drivers, set their pay, link them to riders, and manage their contract terms as a group. In the days after the vote, Uber said the California bill won’t affect its operations because drivers aren’t part of its “core” business, seemingly setting the stage for legal opposition that Uber and Lyft and likely to mount.

Uber’s chief legal counsel Tony West said during a press call that several previous court rulings “have found that drivers’ work is outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces.” Uber also announced last week that it had cut 435 full-time employees from its staff—”specifically around 170 people in our Product group and 265 people in Engineering, which is roughly 8 percent of those [groups]”—in the hopes of helping restore the “edge” at Uber.

“While certainly painful in the moment, especially for those directly affected, we believe that this will result in a much stronger technical organization,” Uber wrote in a statement.

In New York, however, workers have been reacting to a different round of news: last Friday, Uber told its NYC drivers by email that, starting on Tuesday, the platform will adopt the method that Lyft pioneered this summer, designed to limit drivers’ on-the-clock hours without passengers in the car.

In response, members of the New York-based Independent Drivers Guild (IDG) formed a driver caravan to snarl traffic on the Brooklyn Bridge and FDR Tuesday morning in a rush-hour protest.

See also: California Senate Committee Approves AB5, Sending Bill To Full Vote

Like San Francisco and Los Angeles, NYC accounts for a large chunk of Uber and Lyft’s US market shares; it’s also home to some of the nation’s first ride-hail regulations around pay, as implemented by New York’s Taxi and Limousine Commission (TLC) over the past year. Unlike drivers in California (and most other places), Uber and Lyft drivers in New York City must use dedicated commercial vehicles, which they own, lease, or rent, and follow certain local rules as per the for-hire licenses the TLC has issued for several years.

So while many trends and challenges in drivers’ work occur industry-wide—for example, how older drivers earn less, or how women earn an average of $1.24 per hour less than men, with a six-month turnover rate of 76% versus men’s 60%, according to the site Business of Apps—NYC’s roughly 80,000 ride-hail drivers also have their own specific set of needs and concerns. 

To that end, the TLC has started requiring ride-hail companies to pay their NYC drivers a minimum hourly wage, which is calculated using the firms’ average rates of vehicle occupancy, or utilization. As the New York Daily News reported in August after the TLC’s latest rule-making session, too, “Come February, app-based cars will be required to have a passenger in tow at least 64% of the time they spend in Manhattan below 96th St. Next August, they’ll be required to have a fare at least 69% of the time they spend in the zone […with] heavy fines [for] companies whose cars violate that ‘cruising cap.'”

From the beginning, Lyft has argued that this kind of system will serve to benefit Uber, with its bigger driver and rider pool, and higher rates of occupancy.

Starting in late June, Lyft also rolled out its own system for handling the change, which Uber itself will now adopt: in short, limiting when drivers can be signed into the platforms, based on where they are, what time it is, and other factors.

Under this system, which Lyft describes as “supply control,” drivers can no longer log into the system whenever and wherever they want, except during certain time windows, or supposedly if they have a certain rating.

Instead, drivers who complete a fare and find themselves in a zone with insufficient demand (or who initially try to log there) won’t be allowed back onto the platform; they may then be directed using a ‘heat map’ system to areas of the city with greater demand, where they may be able to log in again and receive fares.

The companies say that this system will help lower the amount of time that cars cruise around empty, as required by NYC’s new methods for ride-hail regulation and combating traffic. Drivers say they can no longer work the hours they want, and must now travel between NYC boroughs searching for fares—generally, heading back to the ‘heat zone’ of Manhattan—while both empty and off the clock.

In a TLC hearing this summer, Lyft driver and IDG member Tina Raveneau testified that the platform only allows her to log in unrestricted during a four-hour morning window Monday to Thursday, which conflicts with taking care of her son. Earlier this summer, IDG also argued that Lyft was giving preferential treatment on the platform to drivers who lease vehicles from Lyft, which can cost more than $400 a week.

In light of Uber’s pre-planned adoption of the new system, which IDG spokeswoman Moira Muntz said “violates the spirit” of the pay law (if not the letter), drivers’ calls for action from New York’s TLC have increasingly mounted.   

“The truth is that no one but Uber has control over when drivers can be on the app. The same goes for Lyft, which already implemented the same policy of logging drivers off the app when demand is low,” said Bhairavi Desai, executive director of the New York Taxi Workers Alliance, in a statement. “Lyft, you may recall, is the same company that has been lying to California drivers, telling them that the new rules in AB5 will force the company to make drivers work scheduled shifts, when nothing in the law has any impact on driver schedules.”

See also: The Delivery War Is Reckless And Vain

The ride-hail companies, naturally, have taken a different stance, arguing that the system is a necessary step toward adhering to TLC rules for pay and vehicle occupancy.

Uber commented in a statement, “Time and again we’ve seen Mayor de Blasio’s TLC pass arbitrary and politically-driven rules that have unintended consequences for drivers and riders — despite objections from City Councilmembers, transportation experts, editorial boards and community groups. We stand ready to work with governments to help cities, riders, and drivers [through] policies like congestion pricing, the only evidence-based plan to reduce traffic and fund mass transit.”

Lyft spokeswoman Campbell Matthews said in a statement, “Because of the TLC regulations, we’re forced to make changes to the Lyft app to not allow drivers to be online if there isn’t enough demand for rides. The TLC’s approach is bad public policy, and we are working diligently to support drivers during this change.”

As Henry Grabar reported for Slate this spring, Uber continued its habits of heavy spending and near-unchecked expansion leading right up to its IPO. To wit, “the company lost more than $3 billion on operations in 2018, revenue growth slowed between Q3 and Q4, and there’s a possibility that the company might continue to offer big incentive payments to drivers for quite some time and never reach profitability,” Grabar wrote.

When it comes to both its California and New York markets, however, Uber is apparently well aware of how important its metropolitan operations will continue to be. Grabar quoted a corporate filing from the company, which read:

We experience greater competition in large metropolitan areas than we do in other markets in which we operate, which has led us to offer significant Driver incentives and consumer discounts and promotions in these large metropolitan areas … An economic downturn, increased competition, or regulatory obstacles in any of these key metropolitan areas would adversely affect our business, financial condition, and operating results to a much greater degree than would the occurrence of such events in other areas.

On the matter of whether their new ‘heat map’ typically sends signed-out drivers back toward busy Manhattan, as drivers have suggested, Lyft said it is continuing to monitor the impacts of its supply control methods, which are still fairly new.

See also: Gigs and AI Are Driving Us Into Digital Servitude