A judge said Thursday that New York City regulators could move forward and raise minimum wages for app-based food delivery drivers, ruling against three delivery giants that had challenged the rule.
The new minimum wage law, intended to force tech companies to pay gig workers better, would require platforms to initially pay workers about $18 an hour and increase that amount to $20 an hour by 2025. Delivery workers currently earn about $11 an hour, according to the city’s estimate, which takes an hour on average.
The increase was set to begin in July, nearly two years after the City Council passed a groundbreaking bill to improve working conditions for couriers.
But just days before the increase was set to take effect, three companies, Uber, DoorDash and Grubhub, filed requests for injunctions in the state Supreme Court in Manhattan to block it. Relay, a smaller New York-based food delivery platform, did the same. The judge, Nicholas Moyne, paused while he considered the change.
On Thursday, he ruled against the three larger delivery companies and allowed the wage increase to pass, but said Relay, which has a different business model, should be granted an injunction allowing it to continue to challenge the increase.
“Petitioners have demonstrated no prospect of success on the merits,” Judge Moyne wrote in his decision. It is possible that the three larger companies will appeal his ruling.
The tech platforms argued that they would be forced to pass on the cost of higher wages to consumers through price increases. They said the city’s modeling did not correctly calculate how higher prices would hurt local restaurants. And they said the new system would work to the detriment of delivery workers because to control costs, companies would have to closely monitor how much time employees spent using the apps without actually making deliveries.
In his decision, Judge Moyne rejected these arguments and said workers could continue to have flexible arrangements while earning a minimum wage.
“Higher pay, including for on-call time, is not necessarily mutually exclusive with worker flexibility, and it is not irrational to pursue both goals at the same time,” he wrote.
But he said the New York Department of Consumer and Worker Protection, the agency behind the new wage law, did not adequately consider the differences in Relay’s business model when setting the minimum wage standard. Relay does not take orders from customers, as Uber and DoorDash do, but contracts directly with restaurants that take orders and send couriers to them.
The New York agency “does not adequately explain why a third-party courier service such as Relay should have the same minimum wage as the less efficient third-party delivery services,” Judge Moyne wrote.
The Workers’ Protection Agency did not immediately respond to a request for comment.
Uber criticized the decision, saying the city used faulty reasoning when calculating the minimum wage.
“The city continues to lie to workers and the public,” Josh Gold, an Uber spokesman, said in a statement. “This law will put thousands of New Yorkers out of work and force remaining couriers to compete against each other to deliver orders faster.”
The Worker’s Justice Project, a labor rights group that advocated for the new wage law, welcomed the judge’s decision.
“Despite their desperate attempts to sow division and pit workers against each other, Uber, DoorDash and Grubhub continue to lose time and again in their fight to ensure a living wage for New York City’s 65,000 delivery workers,” Ligia Guallpa, the group’s executive director, said in an explanation.
Delivery workers opposed to the lawsuit had gathered for a hearing in Lower Manhattan on August 3, where Judge Moyne watched hours of PowerPoint presentations from lawyers for the gig companies explaining the intricacies of driver utilization – which measures how are the workers busy, when are they logged into the apps – and how the opposing sides have divided full-time and part-time work.
“Right now they’re making poverty wages thanks to these billion-dollar apps,” Karen Selvin, an attorney representing the city, told the judge.
The decision in New York contrasted with a series of recent victories by gig companies, which earlier this year successfully petitioned Gov. Tim Walz of Minnesota and Jacob Frey, the mayor of Minneapolis, to block bills that would impose a minimum wage on Uber and Lyft drivers argued that the pay increases for drivers had made ride-hailing services too expensive to operate.
But Terri Gerstein, a labor rights attorney at Harvard Law School’s Labor Center, pointed to previous victories by labor advocates in minimum wage cases, including in New York City and Seattle, as a sign that Uber’s success on such issues is not inevitable.
“Even though the gig companies have enormous political power and enormous amounts of money when they bring cases to court, they don’t always win,” she said. “There is room for progressive cities to take action to ensure that these workers receive at least a minimum wage.”
For years, gig companies and union activists have battled over the compensation and treatment of workers. Gig workers are independent contractors, meaning they are responsible for their own expenses and do not receive a minimum wage or health benefits like employees.
Uber and other gig companies argue that workers value the flexibility to set their own hours and be independent, while unions argue that they are being exploited and deserve better protections.
Some states have already adopted minimum wage standards. In California, gig companies supported a ballot measure passed in 2020 called Proposition 22, which gave gig workers a minimum wage and other limited benefits in exchange for not classifying them as employees. (It is currently facing a legal challenge.) Washington state lawmakers passed a similar law last year, and Seattle has had a minimum wage law for gig suppliers since 2020.
New York’s proposal was already a compromise after the city scaled back an earlier plan to pay delivery workers $23 an hour. The gig companies faced the difficult challenge of proving that the city was “arbitrary and capricious” in enforcing its wage standards, and ultimately failed.