Judge Delays Rollout of Delivery Worker Minimum Wage Law
A planned pay increase for tens of thousands of delivery workers hit a roadblock Friday, after a Manhattan judge stalled the rollout of a landmark minimum wage law — days before it was set to take effect.
Manhattan Supreme Court Judge Nicholas Moyne issued a temporary restraining order a day after DoorDash, Grubhub, Uber and Relay filed suit to stop the new law that was supposed to take effect July 12.
The four app-based delivery companies — which account for nearly all the food deliveries in the city — are aiming to stop the law that would require them to begin paying delivery workers $17.96 an hour and make New York the first major U.S. city to implement pay requirements for its estimated 60,000 delivery workers.
By siding with Uber Technologies, Moyne’s order temporarily vacates the Department of Consumer and Worker Protection’s June 12 rule, which would provide a significant boost from the estimated $11 per hour delivery workers currently earn.
It is not clear when, or if, the new pay rate will take effect.
In a statement, the head of the Department of Consumer and Worker Protection said she was “extremely disappointed” at the delay in implementing the minimum pay rate.
“These apps currently pay workers far below the minimum wage, and this pay rate would help lift thousands of working New Yorkers and their families out of poverty.” said Vilda Vera Mayuga, head of the city agency that carried out the rulemaking process. “We look forward to a quick decision so that the dignified pay rate that workers deserve to earn is not delayed any more than necessary.”
“We hope to use this time to work with the City and all stakeholders to figure out a minimum pay rule that doesn’t have devastating consequences for couriers, consumers and restaurants,” said Josh Gold, a spokesperson for Uber.
The suits, filed separately in Manhattan Supreme Court, challenge a local law that would increase the hourly rate to $19.96 — before tips — by April 2025. The bump also takes into account their operating costs, including bikes, equipment and insurance.
In legal filings and statements to THE CITY, the companies say they are not opposed, in general, to efforts to boost workers’ wages. But the companies contend the law will force them to pass on added costs to consumers and potentially drive away business — and claim bias by the city in the rulemaking process.
“For New York City consumers, it will mean — according to DCWP’s own analyses — a $5.18-per-order average increase in charges across the industry, representing a 15% increase on current costs,” lawyers for DoorDash and Grubhub charged in court papers. “For New York City restaurants and other merchants, it will mean losing access to valuable delivery services that merchants — particularly small and independent merchants — cannot replace on their own.”
Relay, a popular app among “deliveristas,” argued in court filings that it should not be included under the law because it already pays couriers on an hourly basis — and that the law could put the company out of business.
All four companies argue the city DCWP did not objectively survey the industry and workforce during the rulemaking process, and that the law singles out app-based food delivery platforms by not including grocery-delivery platforms under the rule.
DoorDash and Grubhub submitted a joint petition, while Uber and Relay each filed separate lawsuits. The four companies account for 99% of app deliveries in the city, according to estimates from the city. DoorDash, Grubhub and Uber respectively own or operate Caviar, Seamless and Postmates, other popular delivery apps.
In a statement, DoorDash said the company and “industry peers” are suing the city “to send a clear and unmistakable message that bad policies cannot go unchallenged, and we will not stand by and let these harmful impacts go unchecked for the communities we serve.”
Late in Arrival
The highly anticipated law followed a yearslong legislative and rulemaking process. The pay scale is mandated by a 2021 local law that requires a minimum wage for app-based food delivery workers.
The minimum pay law was supposed to go into effect in January, but the Adams administration reversed course earlier this year, reopening the public rulemaking process following intense campaigning from several of the major delivery companies. The back-and-forth delayed the implementation of the law by nearly six months.
“We’re not surprised to hear that they’re still not happy,” Ligia Guallpa, a delivery worker advocate, said of the companies. Guallpa is executive director of the parent organization of Los Deliveristas Unidos. “I think they will continue to do whatever they can do to pay workers as minimally as possible, or continue to delay the process.”
City Comptroller Brad Lander, who as a City Council member introduced the bill mandating the minimum pay standards, said the companies “are out to extract every penny they can from the delivery workers whose labor they rely on: that’s the gig business model.”
The joint DoorDash and Grubhub petition came one week after DoorDash announced it would shift its business model nationwide, giving an option to pay workers from $10 to $19 per hour — though excluding workers in New York, California and Seattle, which have all passed laws setting minimum pay standards for workers.
The two companies also argue the city conducted “biased and unreliable” surveys of workers and industry stakeholders in order to draft and establish the rules, and that the law unfairly singles out the companies by excluding grocery delivery platforms, such as Instacart.
“If allowed to stand, this rule will have serious adverse consequences for delivery partners, consumers and independent businesses,” said Grubhub spokesperson Liza Dee. “Grubhub commends the City’s attention to this issue, but we cannot support a solution that has such unintended implications for those who rely on food delivery.”
Meanwhile, Relay argues in court filings that it should have been excluded from the law because its business model differs from industry behemoths DoorDash, Grubhub and Uber.
As a platform that connects restaurants directly with couriers, Relay does not have a consumer-facing app and therefore cannot offset costs associated with increasing wages to customers — a situation that could put the company in a “death spiral,” according to the lawsuit.
“Relay strongly supports the rights of NYC food delivery couriers to earn a living wage,” Matt Miller, a company spokesperson, said in a statement to THE CITY. “However, we believe Relay has been incorrectly classified with other companies in the space.”
Uber, in a separate lawsuit, similarly argues the law would be bad for business, estimating orders placed on the app could decrease by as much as 18%.
“The City’s entire rule depends on the false assumption that restaurants make no money on deliveries,” Uber spokesperson Josh Gold told THE CITY on Thursday. “It must be paused before damaging restaurants, consumers and the couriers it purports to protect.”
The companies also claim the law will strip workers of their flexibility to choose when and how to pick up orders because the law allows companies to pay workers hourly instead of per-trip.
But as the DCWP said in March, the rules allow companies “flexibility in how to meet the minimum pay requirement” by choosing to pay workers an hourly wage or a per-delivery rate broken down by the minute — a controversial compromise from the city after gathering feedback from the companies.
Source: THE CITY
