Uber filed a lawsuit against the New York City Taxi & Limousine Commission (TLC) on Friday to block a mandatory price hike for ride-share drivers in New York City. The TLC submitted the proposal in August and according to Uber, the law that passed last month will result in an increase in the per-minute rate for ride-hail apps and taxi drivers by 7.18% per minute and 16.11% per mile.
However, a TLC spokesperson said in an email to Gizmodo that under its new rules, the minimum rate per minute will increase by 7.42% while the minimum rate per mile will increase by 23.93%. This will amount to an increase in rider fares by $US2.50 ($3) per ride, according to the TLC.
In its lawsuit, Uber has requested that the court issue a temporary restraining order and preliminary injunction to block the ruling while the company’s petition is under review. This is the first metered fare increase since 2012, and a TLC spokesperson told CNBC last month that the change was filed in an attempt to attract more taxis and drivers after reports of a driver shortage across New York City.
Josh Gold, an Uber Spokesperson, said in an emailed statement to Gizmodo, “With this latest rulemaking, on top of the annual inflation adjustment, the TLC is choosing to invent a new methodology that locks in this summer’s high gas prices in perpetuity with a ‘mid-year’ adjustment that takes place 12 days before the end of the year.” He continued, “The TLC should have followed its usual annual adjustment and instituted a temporary gas surcharge when gas prices were actually elevated.”
Uber is now working to prevent the rate increase it must pay New York City drivers by December 19. In its petition, the ride-share company called the increases “dramatic, unprecedented and unsupported hikes,” adding that the earlier increases in fares ranged from 1.46% to 5.34% and “accurately reflected the impact of inflation.”
The increased rates would force Uber to spend $US21 ($29) million to $US23 ($32) million more per month, a cost that the company says it would not be able to recoup without increasing passenger rates and could result in a potential loss in riders.
“A rate increase of this magnitude may very likely result in higher rider fares,” according to the lawsuit, obtained by Gizmodo. “Those higher fares, in turn, will depress the number of rides requested through the Uber platform. Fewer requested rides translate into fewer opportunities for drivers to earn fees. The challenged rule could very well have the effect of harming driver earnings, undermining the purpose of these regulations.”
If the company were to increase the passenger fare to offset the TLC’s requirements, it would result in a 10% increase for riders which would “irreparably damage Uber’s reputation, impair goodwill and risk permanent loss of business and customers,” the lawsuit says.
It added the TLC switched to a “volatile inflation index for a one-time increase that makes no sense, and that is a drastic departure from the Commission’s past practice or any rational approach.”
TLC Commissioner David Do said in an emailed statement to Gizmodo, “We must stand behind our workers without traditional employment protections. New York City leads the nation in protecting drivers, and this important rule reflects that reality.”
He continued, “We are confident that we are well within our legal authority in implementing this important rule, and we are vigorously fighting this lawsuit.”