Uber raises prices in New York in the wake of new wage law

New rule guarantees drivers minimum pay of $17.22 an hour

An Uber car waits for a client in Manhattan. Getty Images

Uber is raising prices, and squeezing drivers, in New York City, where a new minimum wage rule is in effect.

Uber  will increase the price of trips in the city in response to the new rule, the company said in a statement to Bloomberg. In addition, because the rule requires the company to compensate drivers for their return trips after taking riders outside the city, some out-of-town fares will incur a surcharge. A representative of Uber declined to say how much more expensive rides would become.

On top of those price hikes, Uber passengers in much of Manhattan will start paying $2.75 more per trip and 75 cents more per trip for group rides.

As for its New York City drivers, the San Francisco company said, some offers of bonus pay may no longer be available, and starting in May its premium Uber Black service will be restricted to drivers with at least a 4.85 customer rating out of 5. As of September, it will additionally be restricted to those with a vehicle from a narrowed list of options.

Passengers will now have five rather than two minutes to arrive at the pickup point, but drivers will get paid more for the time they spend waiting after that.

The wage rule, passed in December by the city’s Taxi and Limousine Commission, guarantees drivers minimum pay of $17.22 an hour.

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Both Lyft and Juno, US-based ride-hailing services,  filed lawsuits on Wednesday to block the rule, which is part of Mayor Bill de Blasio’s effort to cap the growth of app-based, ride-for-hire platforms and reduce traffic congestion.

In its suit, Lyft said the rule gives “an automatic and perpetual advantage” to Uber, the industry leader. Judge Andrea Masley set a March 18 hearing and in the meantime offered app-based ride-hailing companies the option of placing the additional pay in escrow. Lyft declined to comment on whether it would do so; Juno didn’t respond to an email seeking comment.

Uber, which isn’t challenging the rule, said on it had told the court “that we do not intend to hold back any portion of drivers’ earnings.”