Uber and Lyft found a loophole in a driver pay law. Drivers pushed back.

NEW YORK — New York City was the first place in the United States to mandate minimum pay rates for drivers for companies such as Uber and Lyft. But after the companies found a loophole that made it much harder for some drivers to get by, the city is looking to change its law, prompting dueling pressure campaigns as both sides seek to influence the outcome.

Earlier this year, the two companies began imposing what came to be known as lockouts, which prevented drivers from signing in to the applications during certain periods. The companies said the city’s minimum pay law, which takes into account how much of drivers’ working time is spent transporting passengers, had forced their hands. Bloomberg first reported on the lockouts.

Amadou Diallo, 38, is one of many drivers who say the lockouts have severely affected his take-home pay. Diallo, who has been driving full time for Uber and Lyft for four years, said he used to make up to $350 on a given weekend day, before expenses, but is now making less than $200 during such shifts because of the lockouts.

Uber stopped locking out drivers in September, two months after reaching a temporary agreement with the city, but has since begun a push to lower drivers’ pay. Lyft has continued the lockouts, and Diallo has felt the financial impact. An entire week can go by without the ability to sign in to Lyft in New York, he said, and he has had to travel to New Jersey just to get access.

“I have to reduce so many things,” Diallo said, adding that he can no longer afford to live alone and had to move in with roommates in Flatbush, Brooklyn.

He has also stopped going out to restaurants with his family on the weekends and buying new clothes.

“Everything is going tight,” Diallo said.

The Taxi and Limousine Commission, the city agency that oversees ride-share companies, plans to amend the driver pay law early next year to prevent the companies from engaging in lockouts. As the city mulls over how it will adjust the law, unions that represent drivers have made their demands clear, and so have Uber and Lyft.

The Independent Drivers Guild, which represents about 80,000 for-hire drivers in New York City, demanded this week that the city increase the amount of available work by limiting the pool of new Uber and Lyft drivers, which the union believes would end the lockouts.

The union also called on the city to raise driver pay to account for the rising cost of living. It estimates that thousands of drivers are on the brink of homelessness because of the lockouts.

Uber has argued that the city’s drivers are compensated fairly and that their pay should in fact be lowered. The company released a study last month that found that after driving-related expenses, the average driver makes more than double the city’s minimum wage.

The company has also pointed to the city’s own data, which shows that overall pay for full-time drivers was up in every month from May to October this year compared with last year. The city increased per-trip pay by 3.49% in February to account for rising expenses.

Uber has petitioned the city to reduce pay rates because certain expenses, such as gas and car prices, had dropped. It warned that if the city did not agree, the company would significantly reduce its workforce.

Lyft has not gone as far as Uber, and has said it would like to see the city keep the minimum pay rates but remove a requirement that drivers be busy a certain amount of the time, which is known as the utilization rate. That change would bring the law more in line with pay models in California, Washington and Massachusetts.

Protests have gone on for months as the city weighs what to do next. Most recently, on Wednesday, the Independent Drivers Guild organized a caravan of drivers to demonstrate outside the Taxi and Limousine Commission office in Queens.

Over the summer, in a protest led by the New York Taxi Workers Alliance, nearly 3,000 drivers marched from City Hall to Uber’s headquarters. Drivers also formed a protest motorcade that stretched nearly 20 blocks, taking up three lanes of traffic.

“Without the drivers, there is no Uber, there is no Lyft,” said David Williams, 55, who has taken part in several demonstrations, including Wednesday’s.

Williams has been driving for both companies since November 2014. He said his weekly income before expenses was $1,800 to $2,500 before the lockouts began, and is now around $1,600. He can no longer afford his mortgage payments, he said.

He finds it insulting that Uber is seeking to lower drivers’ pay and has claimed that they are, on average, well compensated.

“Nothing can be further from the truth,” Williams said.

The city created its driver pay law, which went into effect in 2019, after finding that 85% of drivers for ride-hailing apps were making less than minimum wage.

The law established a minimum amount that drivers could expect to earn from each ride, based on a formula that involved the distance of the trip, the time it took and the percentage of overall driving time spent with passengers.

The last factor is known as the utilization rate. The formula for 2024 dictates that drivers need to have a passenger more than 53% of the time they are working. If, at the end of the year, the city finds that drivers are not meeting that benchmark, the utilization rate for the following year will be lowered accordingly. The lower the utilization rate, the higher the minimum amounts the companies are required to pay drivers.

Lockouts ensured there would be fewer drivers on the road, causing the utilization rate to appear higher, which meant the companies would not be required to pay drivers more in 2025.

Josh Gold, a spokesperson for Uber, said the company had limited drivers’ access to its app “during times of low demand” this summer.

“New York City drivers took home more money, spent more time online and did more trips on average while restricted access took place, compared to the same time period a year ago,” Gold said.

Lyft said it started lockouts only after Uber did, adding that it had tried to improve its utilization rate for months before that.

CJ Macklin, a spokesperson for Lyft, said the lockouts were “unfortunately the direct result of the city’s complex driver pay system.” He added that a consequence was that “drivers face reduced earning opportunities and riders experience longer wait times.”

He said if drivers were paid more, riders in New York, who already pay some of the highest fares in the country, would ultimately bear the cost.

Michael Reich, a professor of economics at the University of California, Berkeley, who helped the city design its pay structure, called the lockouts an effort to “game the formula,” adding that the practice “takes away any kind of predictability for earnings, particularly for those drivers who are working more than full time.”

Reich said the lockouts also removed the flexibility that attracted drivers to the platform in the first place. “The drivers have been sold on the idea that they can turn on the app whenever they want to,” he said.

And Kersten from the Taxi and Limousine Commission dismissed the companies’ explanations, noting that the city’s rules did not require them to lock people out. “It’s a choice they are making,” he said.

That choice seems to have changed the lives of thousands of drivers in the city.

In a survey of more than 5,000 drivers conducted by the Independent Drivers Guild, 67% of respondents reported having lost income of $5,000 or more from late May to early December, and nearly 90% said they had struggled to pay their bills because of the lockouts.

Brendan Sexton, the union’s president, said the temporary agreement the city reached with Uber and Lyft in July to phase out lockouts was a step in the right direction.

But, he added, “there needs to be a long-term solution to make sure that drivers get the right pay, that they’re treated with dignity.”

Ibrahim Zoure, 61, started driving for the apps in 2017 after quitting his job with the city’s Access-A-Ride paratransit service, where he made $12 an hour as a driver.

He said when he joined Uber in 2017, he made between $2,500 and $3,000 a week, working 12- to 15-hour days. But as more drivers joined the apps, his pay started to go down. And when the lockouts began, he said, it declined sharply. In October, for instance, Zoure said he made around $700 on average each week.

“I feel like I’ve been deceived by Uber and Lyft,” he said.

He said it has been difficult to find other work to supplement his income because of his age. He has been unable to pay his $2,000 rent in the Brownsville area of Brooklyn and said his landlord planned to take him to court for eviction proceedings in February.

“What they are doing is just creating poor people,” he said of the companies. “My credit is totally ruined. My bank account is empty. I have no money and I’m getting a collection call every day.”

Frank Haley, 46, who has driven for Uber and Lyft since 2016, said he had not been able to get rides through Lyft for the past couple of months. He has depleted much of his savings.

“There is no income; there’s no money to be made,” Haley said. “This is going to force a lot of drivers out of the industry.”

This article originally appeared in The New York Times.

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