Lyft co-founder and president John Zimmer.
Lyft co-founder and president John Zimmer.
Now playing
14:17
Lyft's co-founder is giving his all to catch Uber
Now playing
02:50
Pinterest CEO on why the camera will be the next keyboard
CNN
Now playing
03:30
Pinterest CEO: Our goal is to get you offline
NEW YORK, NY - SEPTEMBER 24:  Randi Zuckerberg attends the American Theatre Wing Centennial Gala at Cipriani 42nd Street on September 24, 2018 in New York City.  (Photo by Noam Galai/Getty Images for American Theatre Wing)
Noam Galai/Getty Images
NEW YORK, NY - SEPTEMBER 24: Randi Zuckerberg attends the American Theatre Wing Centennial Gala at Cipriani 42nd Street on September 24, 2018 in New York City. (Photo by Noam Galai/Getty Images for American Theatre Wing)
Now playing
03:17
Randi Zuckerberg on why she left Facebook
Now playing
03:17
What it was like to grow up in the Zuckerberg household
Randi Zuckerberg participates in the BUILD Speaker Series Be Fierce tech panel at AOL Studios on Tuesday, Oct. 17, 2017, in New York. (Photo by Andy Kropa/Invision/AP)
Andy Kropa/Invision/AP
Randi Zuckerberg participates in the BUILD Speaker Series Be Fierce tech panel at AOL Studios on Tuesday, Oct. 17, 2017, in New York. (Photo by Andy Kropa/Invision/AP)
Now playing
03:20
Randi Zuckerberg: 'Social Network' was best free publicity
Logan Whiteside/CNN
Now playing
01:46
Palmer Luckey on how the virtual world should be regulated
Logan Whiteside/CNN
Now playing
04:02
What the future of warfare looks like, according to Palmer Luckey
Logan Whiteside/CNN
Now playing
02:39
Palmer Luckey: I'm worried China, Russia will beat the US in defense tech
SAN FRANCISCO, CA - JANUARY 31:  A Lyft driver places the Amp on his dashboard on January 31, 2017 in San Francisco, California.  (Photo by Kelly Sullivan/Getty Images for Lyft)
Kelly Sullivan/Getty Images for Lyft
SAN FRANCISCO, CA - JANUARY 31: A Lyft driver places the Amp on his dashboard on January 31, 2017 in San Francisco, California. (Photo by Kelly Sullivan/Getty Images for Lyft)
Now playing
03:32
Self-driving cars are coming. But Lyft co-founder says he'll need more drivers
Lyft co-founder and president John Zimmer.
Lyft co-founder and president John Zimmer.
Now playing
02:45
Here's why Lyft isn't afraid to take a political stand
CNN
Now playing
03:36
Lyft co-founder: I was depressed
SAN FRANCISCO, CA - NOVEMBER 19:  Salesforce chairman and CEO Marc Benioff speaks during a keynote address at the 2013 Dreamforce conference on November 19, 2013 in San Francisco, California. The annual Dreamforce conference runs through November 21.  (Photo by Justin Sullivan/Getty Images)
Justin Sullivan/Getty Images
SAN FRANCISCO, CA - NOVEMBER 19: Salesforce chairman and CEO Marc Benioff speaks during a keynote address at the 2013 Dreamforce conference on November 19, 2013 in San Francisco, California. The annual Dreamforce conference runs through November 21. (Photo by Justin Sullivan/Getty Images)
Now playing
01:04
Marc Benioff: Technology feels completely human
Now playing
01:55
Marc Benioff: I want Time Magazine to be unshackled
Now playing
03:11
Marc Benioff: Facebook is the new cigarettes
Now playing
00:59
Uber CEO on fixing its workplace culture problem
Now playing
03:18
Uber CEO: It's an uncomfortable time for CEOs
Now playing
02:29
Uber CEO hopes you don't own a car in 10 years
CNN
Now playing
02:15
Zuckerberg: I'm not stepping down as Facebook chair
CNN
Now playing
02:51
What Zuckerberg would say to George Soros
(CNN) —  

Lyft is suing the New York City Taxi and Limousine Commission over its first-of-a-kind driver minimum wage law, claiming its implementation would hurt its business.

The agency voted on a minimum pay formula in December to protect ridehailing drivers from being underpaid by companies.

Under the new policy, which is slated to go into effect on February 1, 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 drivers have to cover payroll taxes and don’t get paid time off, the TLC said.

The move would raise the average driver’s pay by $9,600 per year, according to the proposal.

The calculation takes into consideration a “utilization rate” based on how often drivers on a platform have a customer in the car – and Lyft is taking issue with this.

An industry-wide utilization rate is only set for the first 12 months of the rule – and companies can petition to use a company rate instead. Lyft argues this gives the company with the biggest marketshare – Uber – a “built-in” advantage over others. It will make it more difficult for smaller companies to compete on prices and payment for drivers, as well as continue to service less populated areas, the petition said.

“It’s no secret that Uber has tried to put us out of business in the past,” a Lyft spokesperson said in a statement. “They’ve failed repeatedly, and the TLC should not assist them in their efforts.”

According to the petition, Lyft argues that “instead of setting an industry-wide utilization rate that will at all times apply equally to each of the four ridesharing companies, the rule allows any company to use its own company specific utilization rate.”

It asks the court to “vacate” the law.

All eyes are on New York City as its regulatory changes could provide a model for other cities eager to rein in ridesharing firms that have increased congestion even as they’ve revolutionized transportation.

The legal filing is already drawing a lot of scrutiny from the Independent Drivers Guild, a rideshare drivers union, which pushed for two years for the rules to be turned to law.

“The idea that this lawsuit is about anything other than avoiding paying drivers a fair wage is laughable,” said Jim Conigliaro, Jr. Founder of the Independent Drivers Guild, which advocates on behalf of about 70,000 app-based drivers in NYC. “Regardless of any lawsuits, we are calling on Uber, Lyft and Juno to commit to paying their drivers no less than the required minimum wage by Friday.”

A spokesman for the New York City Law Department also pushed back in a statement to CNN: “These rules protect thousands of hardworking drivers who work for the four busiest app companies. The rules ensure minimum income protections, are fair and legal, and we’ll vigorously defend them in court.”

Another ridehailing company, Juno, reportedly also filed a petition against the TLC. The company did not immediately respond to a request for comment.

Lyft stressed it is not taking issue with the minimum wage law itself but rather the implementation of it. In addition to the utilization rate, Lyft also said it is problematic the TLC requires a minimum wage be applied to each ride – not to a weekly calculation of rides – which it says goes against the local law. The rule could also incentivize drivers to pick up passengers in already congested areas, the petition said.

“Our lawsuit does not target the law passed by City Council, but instead addresses the specific way the TLC plans to implement the rules, which would advantage Uber in New York City at the expense of drivers and smaller players such as Lyft,” Lyft’s statement said.

Uber declined to comment.