New York Taxi Commission imposes minimum wage on ride-hailing companies New York Taxi Commission imposes minimum wage on ride-hailing companies

New York Taxi Commission imposes minimum wage on ride-hailing companies
12 Dec 2018

In the first time that salary rules have been imposed on ride-hailing companies in the US, New York City's Taxi and Limousine Commission (TLC) has voted to set a minimum wage for Uber and Lyft drivers.

Under the new rules, which go into effect in January, companies will be obliged to pay drivers US$26.51 an hour in gross pay, or US$17.22 after expenses. The figure is slightly higher than the US$15 minimum wage that the city will require all employers to adhere to by the end of next year but is considered equivalent because drivers are independent contractors.

About 85% of ride-hailing drivers currently make less than the minimum wage, according to an independent analysis commissioned by the TLC. For them, the new regulations will result in an average pay raise of more than US$6,300 per year.

Although Uber and Lyft have said they are in favour of a living wage being given to drivers, both opposed the TLC's new rules, according to the Straits Times. They argued that determining a minimum wage for each ride, rather than over the course of a week, failed to take bonuses and other incentives into account.

Meanwhile, a state official told Fox Business that less than 0.1% of the state's employers – about 220 businesses - had so far opted into an initiative enacted by New York Governor Andrew Cuomo in April to help protect employees from new federal limits on deducting state and local taxes from payroll.

The scheme was enacted in April as part of the State Budget in response to President Trump's federal tax law, which caps the amount of state and local taxes that a taxpayer can deduct from their federal income at US$10,000. The Democratic Governor had attested that the federal cap - which his aides estimate will cost 1.7 million taxpayers US$14.3 billion - was an “assault” on the state's economic competitiveness.

But the programme enables New Yorkers to circumvent this deductibility cap. Employers can opt to impose a levy, which would start at 1.5% next year and rise to 5% by 2021, on employee wages that are over US$40,000. They would then be entitled to reduce or hold down employee wages by the same amount.

Employees would be granted a credit against their state income-tax liability equal to the amount charged in the payroll tax. Although the individual’s pre-tax income would fall, they would pay lower federal taxes and their after-tax income would also be higher.

But problems with the initiative have quickly emerged. Out-of-state employees could face double-taxation in their state of residence that would undo any savings, while collective-bargaining agreements could make it impossible to hold down wages.

Emma Woollacott 

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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In the first time that salary rules have been imposed on ride-hailing companies in the US, New York City's Taxi and Limousine Commission (TLC) has voted to set a minimum wage for Uber and Lyft drivers.

Under the new rules, which go into effect in January, companies will be obliged to pay drivers US$26.51 an hour in gross pay, or US$17.22 after expenses. The figure is slightly higher than the US$15 minimum wage that the city will require all employers to adhere to by the end of next year but is considered equivalent because drivers are independent contractors.

About 85% of ride-hailing drivers currently make less than the minimum wage, according to an independent analysis commissioned by the TLC. For them, the new regulations will result in an average pay raise of more than US$6,300 per year.

Although Uber and Lyft have said they are in favour of a living wage being given to drivers, both opposed the TLC's new rules, according to the Straits Times. They argued that determining a minimum wage for each ride, rather than over the course of a week, failed to take bonuses and other incentives into account.

Meanwhile, a state official told Fox Business that less than 0.1% of the state's employers – about 220 businesses - had so far opted into an initiative enacted by New York Governor Andrew Cuomo in April to help protect employees from new federal limits on deducting state and local taxes from payroll.

The scheme was enacted in April as part of the State Budget in response to President Trump's federal tax law, which caps the amount of state and local taxes that a taxpayer can deduct from their federal income at US$10,000. The Democratic Governor had attested that the federal cap - which his aides estimate will cost 1.7 million taxpayers US$14.3 billion - was an “assault” on the state's economic competitiveness.

But the programme enables New Yorkers to circumvent this deductibility cap. Employers can opt to impose a levy, which would start at 1.5% next year and rise to 5% by 2021, on employee wages that are over US$40,000. They would then be entitled to reduce or hold down employee wages by the same amount.

Employees would be granted a credit against their state income-tax liability equal to the amount charged in the payroll tax. Although the individual’s pre-tax income would fall, they would pay lower federal taxes and their after-tax income would also be higher.

But problems with the initiative have quickly emerged. Out-of-state employees could face double-taxation in their state of residence that would undo any savings, while collective-bargaining agreements could make it impossible to hold down wages.

Emma Woollacott 

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

OTHER STORIES THAT MAY INTEREST YOU

Uber agrees to settle equal pay claim for $10m

Uber owes UK workers up to £20,000 each after failing to comply with court ruling

Mexico to trial automatic tax payment system with Uber

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