Are Independent Contractor Drivers Entitled to a Minimum Wage? NYC Changes the Rules.

New york city rise share drivers minimum wage

Normally, independent contractors are not subject to minimum wage requirements, since those laws (such as the Fair Labor Standards Act) apply only to employees. Lots of litigation focuses on whether contractor drivers should, in fact, be classified as employees and therefore subject to minimum wage and overtime rules, but if the drivers are properly classified as independent contractors, minimum wage requirements typically do not apply.

But under a new rule in New York City, ride share drivers are now entitled to a minimum wage in excess of $15 per hour, despite being independent contractors.

The Taxi and Limousine Commission (TLC) passed the new rule in December, and it is now in effect. Prior legislation passed in the city had clarified the TLC’s authority to pass such a rule and to regulate “for-hire vehicles” (FHVs).

The exact amount is calculated based on a complicated formula, but it should result in gross pay of about $27.86 per hour before expenses, or $17.22 after expenses. The hourly rate is intended to be equivalent to a $15 per hour rate, with the additional $2.22 intended to cover the 7.65 percent ($1.32 per hour) that drivers must pay in payroll taxes (covered by employers for their employees) plus 6 percent ($0.90 per hour) for paid time off (representing the average time off compensation value as a share of a transportation industry worker’s overall compensation according to the U.S. Bureau of Labor Statistics).

Drivers with wheelchair-accessible vehicles are entitled to a higher hourly rate.

As we posted here, NYC had previously passed a rule capping the number of ride share drivers who could drive in New York City.

The bottom line here is that NYC is protecting its taxi drivers by trying to reduce the number of ride share drivers in the city and by raising the cost of using these services. Ironically, Uber/Lyft drivers will now benefit from that protection. TLC estimates that a full-time driver stands to earn an additional $9,600 per year under the new rule. Those costs undoubtedly will be passed on to the customer.

Meanwhile, the subway is still $3, which includes high speed viewing of graffiti art from the comfort of your seat.

For more information on joint employment, gig economy issues, and other labor and employment developments to watch in 2019, join me in Philadelphia on Feb. 26, or Chicago on Mar. 21 for the 2019 BakerHostetler Master Class on Labor Relations and Employment Law: Meeting Today’s Challenges. Advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com. If you list my name in your RSVP, I will have your registration fee waived.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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