AGENCY TESTIMONY
Driver lockouts and utilization rates in the for-hire vehicle industry
1:20:01
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161 sec
Commissioner Do addresses the issue of driver lockouts by high-volume for-hire vehicle companies like Uber and Lyft, explaining the background of the driver pay standard and the challenges with the utilization rate (UR) formula. He outlines recent developments and TLC's plans to address the issue.
- Explains the 2018 minimum driver pay standard and the importance of the utilization rate (UR) in the formula
- Describes how companies have used lockouts to manipulate the UR and avoid paying drivers more
- Outlines a July agreement to end Uber's lockouts by Labor Day and increase Lyft's UR to 50% annually
- Announces plans to establish new rules to ensure fair pay and treatment for drivers
- TLC aims to gather feedback from drivers and stakeholders through a public rulemaking process
David Do
1:20:01
As you know, one major concern in the ForHire industry is Uber and Lyft's restrictions on driver access to their platforms.
1:20:08
Commonly known as lockouts.
1:20:10
As background in 2018, TLC commissioner report by labor economist Doctor James Barrett and Doctor Michael Wright on the need for a minimum driver pay standard for app based drivers.
1:20:21
The report revealed that 85 percent of drivers were earning less than minimum wage.
1:20:26
80 percent of drivers bought their vehicles to drive for those platforms taking on significant personal expense and risk, and driver earnings were declining.
1:20:36
The report recommended a per trip driver pay standard on time, distance, and utilization.
1:20:43
The council then passed local law 150 of 2018 directing TLC to establish such a pay standard.
1:20:49
The utilization rate or UR part of the formula is vital but also frankly has proven the most challenging.
1:20:56
The UR is a percentage of time drivers spend transporting passengers.
1:21:01
If a driver works for 8 hours but only transport passengers 4 of those hours, the u UR is 50%.
1:21:08
Drivers are only paid for trips, so the UR is used as a multiplier to compensate them for all working time.
1:21:16
For example, if a driver would have been paid 10 $10 for a 30 minute trip, but the UR is 50%.
1:21:22
That $10 is multiplied by 2, and that driver must be paid $20 for that trip.
1:21:29
The lower the UR, the more the companies pay their drivers.
1:21:33
They intend to this incentivizes the companies to adequately manage their driver pull and keep drivers busy.
1:21:40
What we have seen is that instead of long term driver supply management, not onboarding new drivers, the companies added new drivers to their platform and then periodically lock them out of the platform to increase their UR.
1:21:53
In other words, the companies use periodic lockouts to avoid paying drivers more.
1:21:59
This is unfair to drivers and defies the intention of TLC's rules and the underlying local law.
1:22:05
In July, we were able to get the companies to end Uber's lockouts by Labor Day, increased Lyft's UR to 50% annually, and in both companies onboarding of new drivers.
1:22:16
We view this agreement as a short term solution to get drivers immediate relief while TLC crafted a long term answer and form of rules.
1:22:25
And the agreement has worked.
1:22:27
Uber's locked out have ended, and the companies are not onboarding new drivers.
1:22:31
We plan to establish new rules to ensure that drivers are paid and treated fairly.
1:22:36
I'm looking forward to a robust public rulemaking process as we gather feedback from drivers and other stakeholders.