Once upon a time…

How Uber and Lyft Used a Loophole to Deny NYC Drivers Millions in Pay

Natalie Lung, Leon Yin, Aaron Gordon and Denise Lu. Oct 10 2024. Bloomberg The Big Take. https://www.bloomberg.com/graphics/2024-uber-lyft-nyc-drivers-pay-lockouts/

Basically:

The law: In 2018, NYC’s Taxi and Limousine Commission enacted the nation’s first minimum-pay rule for rideshare drivers, guaranteeing compensation not just for trip time but also for waiting time between rides. Pay rates are calculated using a “utilization rate” — the percentage of online time drivers spend with passengers (set at 58% for 2024). A lower utilization rate means higher per-trip minimum payments from the companies.

The loophole: Uber and Lyft discovered that by preventing drivers from logging into their apps (“lockouts”), they could erase idle time from the record. This artificially inflates the utilization rate, making drivers appear busier on paper and keeping the per-ride minimum payment lower. The companies blamed the lockouts on TLC regulations, but the TLC does not require them.

The damage: Bloomberg’s investigation (5,300+ crowdsourced screenshots, ~120 driver interviews) found lockouts occurred nearly every hour of every day — including during high-demand periods and surge zones. Drivers lost unpredictable hours of paid work time, racked up debt, and in some cases skipped meals, rest breaks, and legally mandated shift limits trying to compensate. Bloomberg estimated the companies stood to save tens to hundreds of millions of dollars annually by keeping the utilization rate from dropping.

The response: Uber temporarily suspended lockouts in September 2024 under a deal with the mayor’s office and TLC. The TLC commissioner called the practice an intentional exploitation of loopholes and pledged rule changes. The NYC Comptroller and FTC also began inquiries.

Update

N.Y.C. Taxi Commission Restricts Lockouts of Uber and Lyft Drivers

Taylor Robinson, June 26, 2025. NY Times. https://www.nytimes.com/2025/06/26/nyregion/nyc-taxi-commission-uber-lyft-lockout.html

The TLC voted unanimously to restrict lockouts with new rules effective August 1, 2025:

  • Uber and Lyft must give 72 hours’ notice before locking out a driver.
  • Once a driver starts accepting trips, they cannot be locked out for at least 16 hours.
  • $500 fine per violation.
  • Drivers also get a 5% pay raise.

TLC chair David Do called the companies’ behavior “unacceptable.” The drivers’ union called the anti-lockout restrictions the “real victory” but said the pay bump was nominal and more work remains. Uber maintained its full-time drivers still average $75,000/year. Lyft called the changes “a step in the right direction” but continued to argue the underlying pay formula is the real problem.