Creating a brave new world for taxi and limousine service companies, Uber and Lyft introduced their ride-hailing services approximately six years ago. Time has passed and now urban policy makers are shocked at how these very convenient and popular ride-hailing services have quickly changed transportation options in cities like New York City.

To fix a number of practical concerns (including, primarily, concerns of whether ride-hailing drivers for Uber and Lyft and other such services can now earn a decent wage), on Wednesday, August 8, 2018, the New York City Council voted to actually CAP the number of for-hire vehicles from ride-hailing services like Uber and Lyft.

New York City’s new law capping the number of ride-hailing vehicles (and setting a minimum wage for drivers) could mark the beginning of a new wave of governmental laws across the United States to regulate these growing “Uber-like” ride-hailing services.

The taxi industry has of course been seriously hurt by Lyft and Uber’s explosive rise. The price of a taxi medallion, which is required to operate a taxi in New York, has fallen from more than $1 million to less than $200,000.

REASON FOR CAPPING LAW: The new “capping” law was passed in New York City because of serious worries about traffic congestion, and also concerns about decent pay for both taxi and ride-hailing drivers.

On Tuesday, August 14, 2018, Mayor de Blasio signed the new legislation into law directing the NYC Taxi and Limousine Commission to set a minimum wage for drivers and also suspend the issuance of any new ride-hailing vehicle licenses for a year. However, vehicles that are wheelchair accessible do not fall under this new restriction.

INDEPENDENT DRIVERS GUILD PUSHED FOR NEW LAW: The Independent Drivers Guild, an association who fights on behalf of an estimated 65,000 ride-hailing drivers with Uber, Lyft, and others, pushed for the new law (as their members are worried about decent pay for drivers).

UBER AND LYFT FOUGHT THE NEW LAW: Uber and Lyft predictably fought against the new law, arguing the new law will do nothing to alleviate congestion or enhance the city’s suffering subway and mass transit system. Uber and Lyft also warned that limiting ride-hailing vehicles would create additional passenger delays and limit ride-hailing to outer neighborhoods (creating less service for minorities who live there).

QUOTE FROM LYFT SPOKESWOMAN: “These sweeping cuts to transportation will bring New Yorkers back to an era of struggling to get a ride, particularly for communities of color and in the outer boroughs,” Lyft spokeswoman Campbell Matthews said in an email. “Not only will this keep tens of thousands of New Yorkers from realizing the economic opportunity of driving with Lyft, but it will do nothing to solve the congestion and other complex challenges in New York. Lyft will never stop working to ensure New Yorkers have access to reliable and affordable transportation in every borough.”

New York’s move to cap the number of ride-hail vehicles and to set pay rules for drivers will likely provide a model for other urban governments across the United States who want to control the ride-hailing industry.

Questions?: For further information on employment law and/or independent contractor status and various strategy steps to evaluate and strengthen independent contractor status, please contact Attorney Nancy Joerg at Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.