Lyft, Uber sue New York City to block driver retention law

A Lyft driver takes a customer to the airport, Monday, Jan. 29, 2024, in Baltimore. (AP Photo/Mike Stewart)

Lyft joined Uber Technologies in suing New York City to block a new law they said would force them to keep bad drivers who threaten public and passenger safety on their platforms.

The Lyft lawsuit was filed late Wednesday in Manhattan federal court, 24 hours after Uber sued.

Both companies are challenging Local Law 52 of 2026, which generally prevents large ride-sharing companies from swiftly dismissing drivers absent a “bona fide economic reason” or “just cause.”

The companies said the law targeting “wrongful deactivations” violated their due process and free speech rights under the U.S. Constitution.

They also said the law threatened irreparable harm by undermining their reputation and goodwill while keeping unsafe drivers, including those accused of sexual misconduct, on the road.

Lyft called the law “hazardous” and Uber called it “reckless.” The law would take effect on July 28, after the City Council in January overwhelmingly overrode former Mayor Eric Adams’ veto.

A spokesman for New York City’s law department said on Thursday it is reviewing both cases.

Uber and Lyft, both based in San Francisco, have faced criticism that they don’t do enough to stop drivers who abuse passengers or commit fraud.

As of June 1, Uber faced 3,571 lawsuits and Lyft faced 54 lawsuits in nationwide litigation in San Francisco federal court accusing drivers of sexual misconduct.

In challenging the New York City law, Lyft and Uber objected to requirements that they give drivers 14 days’ notice before letting them go, and potentially rehire drivers deactivated since 2019 solely because they did not receive such notice.

They also objected on privacy grounds to requiring passengers to detail alleged misconduct to accused drivers, and objected to a heightened burden of proof when defending against drivers who challenge their deactivations in court or arbitration.

City Council Speaker Julie Menin and Council Member Shekar Krishnan, the law’s main sponsor, said they looked forward to the law being upheld in court, and that the council will “fight to ensure all app-based drivers have basic due process protections.”

Reporting by Jonathan Stempel in New York; Editing by Mark Porter