Uber is taking New York City’s Taxi and Limousine Commission (TLC) to court.
The popular ride-hailing app recently filed a lawsuit against the Commission to block its effort to raise the per-minute and per-mile rates of ride-hailing app drivers, per Tech Crunch.
The TLC previously voted to increase the rates drivers base their earnings on due to the rising operational costs diminishing the number of drivers post-pandemic.
Uber vs. Taxi and Limousine Commission Lawsuit Details
Uber accused the TLC of using unsound economic principles to “achieve a predetermined result,” adding that the increases were “dramatic, unprecedented, and unsupported” as earlier price increases accurately reflected the impact of inflation.
The ride-hailing company also added that the Commission voted too quickly on the matter, saying it didn’t propose a solution to balance the risks of the price increase.
You may remember that the TLC voted to raise drivers’ per-minute and per-mile rates by 7.42% and 24%, respectively, to help drivers offset their increased operating and living expenses after they reached out to the Commission.
As a result, a 30-minute 7.5-mile trip will require Uber and Lyft to pay drivers a minimum of $27.15 – around $3 more than its current rate.
Should the TLC’s price hike get approved as it is, Uber will have to spend an additional $21 million to $23 million per month – amounts that Uber would be unable to recover from.
Although Uber could try to offset the price hike by increasing rider fares, it would result in a 10% price increase in the amount riders would need to pay. The resulting price increase will damage Uber’s reputation and goodwill, along with a permanent loss of business and customers.
This loss of business will result in fewer opportunities for drivers to earn fees, harming their earnings and undermining the purpose of the TLC’s regulations, Uber said in the lawsuit.
These effects are unwelcome on the company’s part due to its cost-cutting efforts since May, when it told employees that hiring will be considered a “privilege.”
Uber is one of the companies that experienced unsustainable growth following the initial onset of the COVID-19 pandemic in 2020, when government-mandated lockdowns and quarantines forced people to stay in their homes or look for alternatives to public transportation to get around places.
TLC’s Response To Uber
The TLC isn’t backing down on its proposed price increase, however. According to the Commission’s statement, Uber is apparently taking away the holiday cheer from New York families with its lawsuit after months of public hearings, years of stalled wages, and the pandemic decimating incomes.
Uber’s lawsuit is also denying the existence of a fuel surcharge to only NYC drivers when costs rose due to record-high inflation. The TLC also pointed out that Uber is already charging passengers 37% more compared to 2019, while it had the gall to call the raise it proposed as capable of breaking it.