NYC sets first-of-its-kind minimum pay rate for Uber, Lyft drivers

(CNN) Drivers for Uber, Lyft and other ridehailing companies will soon get a minimum wage in New York City.

On Tuesday, the city's Taxi and Limousine Commission voted on a minimum pay formula to protect ridehailing drivers from being underpaid by companies. Under the new policy, drivers will earn a minimum take-home wage of $17.22 per hour. That's the ridehailing equivalent of a $15 minimum wage, accounting for the fact that those drivers have to pay payroll taxes and do not receive paid time off, the TLC said.

The move, which will go into effect in 30 days, is expected to raise the average driver's pay by $9,600 per year, according to the proposal.

The minimum pay floor is a first for the US ridehail industry and could mean rides in New York will get pricier.

The formula takes into consideration time spent working beyond driving passengers, such as waiting for a dispatch or traveling to pick up a rider. It also provides some protection for ridehailing drivers, who are classified as contractors ineligible for many benefits and rights that protect employees.

New York City drivers will also earn a "shared ride" bonus set by the TLC for picking up and dropping off carpool riders. Other changes include a new "out of town rate" to pay drivers for time spent returning to New York City from a trip that took them outside its borders.

New York City is on the forefront of regulatory changes that could provide a model for other cities in the future.

In August, the New York City Council approved a package of bills related to the issue, including the ability for TLC to set a minimum pay for ridehail drivers.

The push for regulatory change comes after reports that the uptick in ridehailing services has sharply cut into driver earnings. At least six taxi drivers committed suicide in the first half of 2018.

Critics of the proposal — including ridehailing's biggest companies — say the pay mandate will make it harder and more expensive for passengers to get around.

Uber's director of public affairs Jason Post said in a statement, "The TLC's implementation of the City Council's legislation to increase driver earnings will lead to higher than necessary fare increases for riders while missing an opportunity to deal with congestion in Manhattan's central business district."

Lyft also pushed back on the pay rules.

"Unfortunately, the TLC's proposed pay rules will undermine competition by allowing certain companies to pay drivers lower wages, and disincentives drivers from giving rides to and from areas outside Manhattan. These rules would be a step backward for New Yorkers, and we urge the TLC to reconsider them," Lyft said in a statement.

About 80,000 drivers in the city are affiliated with four ridehailing companies: Juno, Lyft, Uber and Via, according to a report commissioned by the Taxi and Limousine Commission and conducted by The New School's Center for New York City Affairs. That number is up from 12,600 in 2015. New York City has about 14,000 taxi drivers.

"Today we brought desperately needed relief to 80,000 working families," Jim Conigliaro, Jr., founder of the Independent Drivers Guild which advocates for ridesharing drivers, said in a statement. "All workers deserve the protection of a fair, livable wage and we are proud to be setting the new bar for contractor workers' rights in America."