Three major food delivery app companies, DoorDash, Uber Eats, and Grubhub, have taken legal action against New York City in an attempt to block a groundbreaking law that establishes minimum wages for their workers. The law mandates a minimum pay of $17.96 per hour beginning on July 12, 2022. The rate will increase to $19.96 per hour in April 2025 and will be adjusted annually to account for inflation.
Under the new law, app companies must compensate workers either 50 cents per minute spent on a delivery trip or a minimum of $17.96 per hour for time spent on the app. This roughly equates to 30 cents per minute, excluding tips.
Currently, over 60,000 food delivery workers in the city are paid based on the number of trips made and earn an average of $7.09 per hour, excluding tips, according to the New York City Department of Consumer and Worker Protection (DCWP), which is responsible for drafting the law.
The DCWP stated that “delivery workers, like all workers, deserve fair pay for their labor, and we are disappointed that Uber, DoorDash, Grubhub, and Relay disagree.” Relay Delivery, another restaurant delivery service, has also filed a lawsuit of its own.
One of the main concerns highlighted by the DCWP is that as independent contractors, delivery workers bear the brunt of expenses and do not receive benefits such as workers’ compensation or paid time off. In addition, they have to pay higher Medicare and Social Security contributions.
On the other hand, the app companies argue that the new per-minute rate could lead to increased trip costs for customers and ultimately limit their ability to hire more workers. They also claim that gig workers, who are classified as independent contractors rather than employees, often work on multiple delivery apps simultaneously, potentially resulting in multiple companies paying them for the same hours.
This legal battle between the app companies and the city of New York has significant implications for the gig economy, particularly in relation to worker protection and fair compensation. The outcome of this lawsuit will undoubtedly impact the future of app-based food delivery services in the city and potentially set a precedent for similar laws elsewhere.
Uber Responds to New York City’s Rule on Delivery Earnings
An Uber spokesperson has criticized New York City’s new rule regarding earnings for restaurants providing delivery services. The spokesperson stated that the entire rule is based on the false assumption that restaurants do not make any profit from deliveries. They called for the rule to be paused in order to avoid damaging the interests of restaurants, consumers, and couriers that it claims to protect.
DoorDash Expresses Opposition to New Earnings Standard
DoorDash has also voiced its concerns over the new earnings standard implemented by New York City. In an email statement, a DoorDash spokesperson stated that they will not allow harmful policies to go unchallenged. They emphasized the negative impacts of the earnings standard on customers, merchants, and delivery workers in the city. The spokesperson highlighted that DoorDash and other industry players had repeatedly warned the city about the flawed process used to establish the rule.
Grubhub Raises Serious Concerns about New Rule
Grubhub, in an emailed statement, expressed serious concerns over the new rule implemented by New York City. Although the company appreciates the city’s attention to the issue, they cannot support a solution that has unintended implications for delivery partners, consumers, and independent businesses. Grubhub warned of potential adverse consequences if the rule is allowed to stand, including higher prices and fewer delivery options for restaurants. The company also joined DoorDash in filing a joint lawsuit, citing potential significant financial damages.
Advocacy Group Accuses Companies of Preventing Livable Wages
The Worker’s Justice Project, an organization promoting the rights of low-wage essential workers in New York City, criticized Uber, DoorDash, and Grubhub for their opposition to the new rule. They argued that it is unacceptable for multi-billion dollar companies to use their resources to prevent over 65,000 app-based delivery workers from earning a livable wage.