NEW YORK — Uber and Lyft’s efforts to restrict when and where New York City drivers can work undercuts their claims of a hands-off relationship with their struggling work force, industry observers say.
The companies’ moves to block drivers from logging onto their apps because of low demand suggests they will have to treat their workers more like employees in the Big Apple’s heavily regulated market rather than independent contractors, who do not have the same benefits or protections, observers argue.
“I think it’s rotten and self-serving and hypocritical and exposes the lie at the heart of their business model,” said City Council Member Brad Lander, who sponsored the legislation mandating the city’s minimum-pay rules at the heart of the debate.
“When it’s good for them, they want to say their drivers are independent contractors who have flexibility and set their own hours and should be treated not as employees but independent contractors,” added Lander, a Brooklyn Democrat. “But when they want to exercise control over their drivers in order to save themselves money, they don’t hesitate to do it.”
Uber last week began blocking drivers from taking ride requests at locations and times of the day that demand for trips is low. The company said its hand was forced by both the city and Lyft, which imposed similar limits on its drivers in June.
Hundreds of app-based drivers clogged traffic in Manhattan last week to protest Uber’s decision and condemn the Taxi and Limousine Commission for not taking bolder action against the two leading ride-hail firms. The protest was led by the Independent Drivers Guild, a labor group for app-based drivers that it funded in part by Uber.
Uber and Lyft say their supply-control strategies are necessary because of the TLC’s first-in-the-nation rules establishing a pay floor for app-based drivers. The companies argue that limiting the number of cars on the road is the only workable way for them to follow the rules, which are based on how much time drivers spend actually carrying passengers.
“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,” Lyft spokesperson Campbell Matthews said in a statement. “The TLC’s approach is bad public policy, and we are working diligently to support drivers during this change.”
To James Parrott, one of the economists who helped craft the minimum-pay rules, it’s “inevitable” that the app companies will move further toward an employer-employee relationship with their drivers.
That’s because TLC’s stringent regulations on the ride-hailing industry — including the pay rules and a continued freeze on most new for-hire vehicles — push the firms to better manage how drivers use their time, Parrott said.
“That’s a direction that exerts more company control over the driver than what the companies would like to see,” Parrott said. “But that’s the problem with their business model. It’s not a problem with drivers or the regulation or anything else.”
“I don’t see how else this industry can function,” he added.
Uber has fought efforts in New York and elsewhere to classify app-based drivers as full employees. The latest battle in that fight has unfolded in California, where Gov. Gavin Newsom signed a law last week aiming to give drivers employee status.
After lawmakers passed the measure, Uber Chief Legal Officer Tony West said nothing would change for drivers in the short term and argued that the work they perform is “outside the usual course of Uber’s business.”
Both Uber and Lyft contend that the new driver restrictions are merely unintended consequences of the TLC’s rules. In Uber’s eyes, following the rules does not change the company’s relationship with its drivers.
“If the regulations change, Uber’s products would change with them,” Uber spokesperson Harry Hartfield said in a statement. “The idea that our decision to comply with regulations renders us an employer is illogical.”
While the TLC does not decide whether drivers are employees, the agency argues the apps do not need to lock drivers out to make the rules work.
The companies could use incentives that encourage drivers to work when demand is high and stay offline when it’s low instead of blocking them from driving altogether, the TLC, Lander and Parrott argue. (Both Uber and Lyft say they show drivers maps that direct them to parts of the city where demand for rides is highest.)
“The Mayor, TLC and City Council put in place smart policies to address the problems these companies created, and they are finally being forced to experiment with ways to run their businesses in an environment of accountability,” Acting TLC Commissioner Bill Heinzen said in a statement.
The TLC and the council should change the city’s rules or their underlying law to address the practice, Lander said, though he did not offer details about how to do that.
But driver advocates want the TLC to take more immediate and aggressive action against the restrictions. The Independent Drivers Guild urged the commission to do so in a June letter, before Lyft first started locking drivers out. The letter argued that the apps’ tactics do not account for all of the time drivers spend waiting for trips, traveling to pick up riders and actually carrying passengers.
“They should be able to step ups and say, ‘No, your loopholes should not be exploited at the expense of drivers,'” said Aziz Bah, a Corona Uber driver who is a steward for the guild.
This story has been updated to include more details of the Independent Drivers Guild’s June letter to the TLC.
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