New York City Enacts Mandatory Minimum Wage for App-Hail Drivers

Date   Dec 18, 2018

Executive Summary: On December 4, 2018, the New York City Taxi and Limousine Commission (TLC) adopted rules mandating a minimum wage for app-hailed drivers. According to the TLC, approximately 80,000 affected drivers stand to earn an average of $10,000 more per year. FordHarrison recently wrote about the New York City Council’s (“the Council”) adoption of a suite of regulations targeting the app-hail industry:

In response to a spate of driver suicides and increased traffic congestion, the Council this summer enacted several amendments to the City’s Administrative Code in an effort to regulate the app-hail industry, but left it up to the TLC to implement a rule establishing a minimum wage for drivers. The new rules are expected to go into effect in mid-January, 2019.

The new minimum wage of $17.22 per hour, after expenses, is the independent contractor equivalent of a $15.00 per hour minimum wage, when accounting for additional payroll taxes and no paid time off. The increase is even greater for drivers with wheelchair accessible vehicles, who stand to earn an additional $14,000 per year when a car is put on the road, with another $4,000 per year while the vehicle is in service.

In addition to the wage increases, the TLC has capped credit card processing fees that may be passed on to the drivers. This is expected to save the average driver $1,000 per year. And, in an effort to increase transparency and understanding, the TLC will be rolling out a pay calculator so drivers know exactly how much they should be earning under the new rules.

The TLC’s rules are in line with the general momentum among New York City lawmakers to protect gig-economy workers. For example, New York City’s Freelance Isn’t Free Act (FIFA), enforced by the Department of Consumer Affairs, went into effect on May 17, 2017. It offers basic protections for independent contractors and freelance workers by requiring written contracts, timely payment, and protection against retaliation. Moreover, FIFA provides steep penalties for employers who violate its provisions.

Employers’ Bottom Line: New York City is the first major metropolitan area to enact a law mandating that app-hail companies make minimum payments to drivers. Other cities are likely to follow suit, as the fight for a $15.00 per hour minimum wage gains support across the country. The latest TLC rules and FIFA underscore the importance of keeping abreast of local laws that may impact an employer’s pay practices and liability.

If you have any questions regarding laws affecting independent contractors in New York City, or any other labor or employment issues, please feel free to contact the author of this Alert, Valerie K. Ferrier, Senior Associate in the New York City office. You may also contact the FordHarrison attorney with whom you usually work.