On Friday, New York City plans to implement some of the country’s most progressive worker protections for ride-hail company drivers. According to new rules approved by the city’s Taxi and Limousine Commission in December, drivers for Uber, Lyft, Juno, and Via would have to make at least $17.22 per hour, no matter the time of day or how many rides they give. City officials say the move would increase the average New York ride-hail driver’s salary by 14 percent and would ensure that every driver meets the city’s minimum wage of $15, even after expenses like fuel and vehicle maintenance. The city says the 85 percent of drivers currently making below the minimum wage would net an extra $6,345 a year.

Or maybe not.

On Wednesday, ride-hail companies Lyft and Juno (which is owned by the Israeli company Gett) filed separate lawsuits against the TLC in state court, alleging the rules would unfairly advantage Uber, the city’s largest ride-hail provider. A judge denied the companies' request for temporary relief, which would have postponed the new rules set to roll out Friday. While the issue is pending, the difference between what Lyft and Juno would have paid drivers before and after the new law will be held in an escrow account. The companies' next day in court is slated for mid-March. (The two other ride-hail companies in New York, Uber and Via, have not taken legal action against the rules.)1

Yes, it makes sense that these companies would be against rules forcing them to pay drivers more per trip. (Reminder: Both Lyft and Uber are set to IPO this year.) But the Lyft and Juno lawsuits make more nuanced arguments about New York’s new rules.

What the companies dispute is the way the city regulator calculated its wage floor. The $17.22 figure is derived from a lengthy analysis completed by two labor economists last summer. The formula takes into account each ride-hail trip’s length, distance, and something called a “utilization rate.” The economists figured that New York wanted to come up with a fair minimum wage for drivers, sure—but that the city also wanted to incentivize these companies to keep their cars filled at all times. (The companies want to do the opposite: keep the number of drivers high to drive down riders’ wait times.) A company with a low “utilization rate” would have too many ride-hail vehicles on the road, circling while waiting for riders and clogging up traffic. New York wants to force ride-hail companies to up their utilization rates and become more efficient.

But each company’s utilization rate is different. Uber’s and Via’s are the highest, at 58 percent and 62 percent respectively. (That means riders are in NYC Ubers 58 percent of the time its drivers are logged on.) Lyft’s and Juno’s are lower, at 56 percent and 50 percent, respectively. Those companies argue they would have to pay drivers additional money per trip, compared to Uber and Via, to make up the difference between what drivers earn and the wage floor. And that they’d have no choice but to pass those costs on to New York passengers, who would end up paying higher prices for Lyft and Juno rides, especially compared to Uber.

They say that the city’s decision to use the companies’ current utilization rates favors the company that currently has the most vehicles on its app in New York—that is, Uber. (Via’s utilization rate is higher than Uber’s not because it has more drivers but because it offers only shared rides, much like Uber’s ride-pooling service, UberPOOL.)