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By: Hellen Zaboulani
A report by Bloomberg shows that rideshare giants have managed to save millions in payouts to New York City drivers by locking them out of their apps.
Uber and Lyft app drivers have been getting locked out of the apps for minutes or hours at a time – with messages that flash “unable to go online” or instructing drivers to go to a busier location. As reported by the NY Post, the lockouts were launched by the rideshare apps in a bid to make drivers seem busier on paper – which could save the companies nearly $30 million in pay by convincing the city against raising a key portion of its minimum wage formula during the annual review, per the Bloomberg report.
The lockouts, which come without warning, have been not only an inconvenience to drivers, but have left them unable to earn the same income. The lockouts occurred at nearly every hour of the day and affected over 800 drivers in NYC, per the Bloomberg’s analysis. When the lockouts occurred during peak times, the local fares would also spike because there was a lower supply of drivers available.
Per the Post, the TLC’s minimum pay rule for rideshare drivers is not a fixed rate, but based on a complex formula which considers factors including trip time and time spent with passengers. By locking some drivers out during off-peak hours, this utilization rate, which is a measure of how much time drivers spend with passengers, drops for drives, leading to a lower payout. The current rate is 58%, which assumes that for every 100 minutes a driver works, 58 of those minutes are spent with a passenger while the rest is spent searching for rides.
A higher utilization rate would translate into a lower minimum fare for each ride. Rideshare drivers are supposed to be paid for the time they spend driving around in-between rides. When drivers get locked out of the app, however, that in-between time is not tracked – and not paid for. Locking out the drivers, then, helped Uber and Lyft to avoid paying drivers for this downtime, the Bloomberg report said. Drivers would need to spend more hours on the road to make up for the lost earnings during the lockout periods.
Uber & Lyft have responded to the complaints about lockouts by saying that the rules set by the NYC Taxi and Limousines Commission has led them to the “limit access”. “Bloomberg’s characterization of lockouts as a loophole is inaccurate and we’ve asked for a correction,” Uber spokesperson Josh Gold told The Post in a statement. “The truth is lockouts have been a terrible but intentional feature of the pay rule since the TLC passed it in 2018, which is why we’ve said for years that the TLC should ditch this outdated approach.”
“The current pay formula still requires lockouts, which means drivers continue to see limits on when they can earn, riders are still waiting longer to get to where they need to go, and Lyft can’t serve New Yorkers in the way they are expecting,” Lyft spokesperson CJ Macklin told The Post in a statement.
