A proposed wage increase for tens of thousands of delivery workers fell through on Friday after a Manhattan judge blocked the introduction of a landmark minimum wage law — days before it was due to go into effect.
Manhattan Superior Court Judge Nicholas Moyne issued an injunction a day after DoorDash, Grubhub, Uber and Relay filed suits to stop the new law, which was scheduled to go into effect on July 12.
The four app-based delivery companies – which account for almost all of the city’s grocery deliveries – want to stop the law that would require them to pay delivery drivers $17.96 an hour, making New York the first major US city to do so make, which introduces payment requirements for the estimated 60,000 mail carriers.
By siding with Uber Technologies, Moyne’s order temporarily overturns the Department of Consumer and Labor Protection’s June 12 rule, which would mean a significant increase from the estimated $11 an hour delivery workers currently earn .
It is unclear when and if the new wage rate will come into effect.
In a statement, the head of the Department for Consumer and Labor Protection said she was “extremely disappointed” at the delay in implementing the minimum wage rate.
“These apps currently pay workers well below minimum wage, and that wage rate would help lift thousands of working New Yorkers and their families out of poverty,” said Vilda Vera Mayuga, chief of the city agency that conducted the rulemaking process. “We look forward to a swift decision so that the decent wage workers deserve is not delayed any longer than necessary.”
“We hope to use this time to work with the city and everyone involved to work out a minimum wage rule that doesn’t have devastating consequences for couriers, consumers and restaurants,” said Josh Gold, a spokesman for Uber.
The lawsuits, which will be filed separately in Manhattan Supreme Court, challenge a local law that would increase the hourly rate to $19.96 — excluding tips — by April 2025. The increase also takes into account their running costs, including bikes, equipment and insurance.
In legal filings and statements to THE CITY, the companies say they are not fundamentally opposed to efforts to raise workers’ wages. But companies claim that the law will force them to pass on additional costs to consumers and potentially deter businesses – and allege city bias in the rulemaking process.
“For consumers in New York City, this will mean an average increase in fees of $5.18 per order across the industry, a 15% increase from current costs, according to DCWP’s proprietary analysis,” the attorneys lamented by DoorDash and Grubhub in court filings. “For New York restaurants and other retailers, this means losing access to valuable delivery services that retailers — particularly small and independent retailers — cannot replace on their own.”
Relay, an app popular with “deliveristas,” argued in court filings that it shouldn’t be covered by 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 that the city’s DCWP failed to conduct an objective survey of the industry and workforce during the rulemaking process, and that the law excludes app-based food delivery platforms by not including food delivery platforms in the rule.
DoorDash and Grubhub filed a joint petition, while Uber and Relay each filed separate lawsuits. The city estimates that the four companies are responsible for 99% of app deployments in the city. DoorDash, Grubhub, and Uber 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 unequivocal message that bad policies cannot go unchallenged, and we will not stand idly by as these detrimental impacts on communities, whom we serve, remain uncontrolled.” .”
Delayed arrival
The eagerly awaited law followed years of legislation and rulemaking. The pay scale is mandated by a 2021 local law that mandates a minimum wage for app-based caterers.
Minimum wage legislation was supposed to go into effect in January, but the Adams administration changed course earlier this year and reopened the public legislation process after intense campaigning by several major suppliers. The back-and-forth delayed implementation of the law by nearly six months.
“We are not surprised to hear that they are still unhappy,” Ligia Guallpa, a delivery worker advocate, said of the companies. Guallpa is the managing director of the parent organization Los Deliveristas Unidos. “I think they will continue to do whatever they can to pay the workers as little as possible or continue to delay the process.”
City Comptroller Brad Lander, the city councilman who sponsored the bill setting minimum wage standards, said companies “are looking to squeeze every penny they can out of the delivery workers whose labor they depend on: That’s the gig business model.” .”
The joint petition by DoorDash and Grubhub came a week after DoorDash announced it would change its business model statewide and give workers the option to pay anywhere from $10 to $19 an hour — albeit excluding workers in New York, California and Seattle, all of which have enacted minimum wage standards for workers.
The two companies also argue that the city conducted “biased and unreliable” surveys of industry workers and stakeholders to draft and set the rules, and that the law unfairly singles out the companies by banning grocery delivery platforms like Instacart.
“If this rule persists, it will have severe negative consequences for delivery partners, consumers and independent businesses,” said Grubhub spokeswoman Liza Dee. “Grubhub commends the city’s attention to this issue, but we cannot support a solution that has such an unintended impact on those who depend on food deliveries.”
Meanwhile, Relay argues in court filings that it should have been exempted from the law because its business model differs from that of industry giants DoorDash, Grubhub and Uber.
As a platform that connects restaurants directly to couriers, Relay doesn’t have a consumer-facing app, so it can’t offset the costs associated with rising customer wages — a situation the lawsuit says could put the company on a “death spiral.”
“Relay strongly supports the right of grocery couriers in New York City to earn a living wage,” Matt Miller, a company spokesman, said in a statement to THE CITY. “However, we believe Relay has been misclassified with other companies in this space.”
Uber also argues in a separate lawsuit that the law would be bad for business, estimating orders placed through the app could drop by as much as 18%.
“The city’s entire rule is built on the false assumption that restaurants don’t make money from deliveries,” Uber spokesman Josh Gold told THE CITY Thursday. “There must be a pause before harm is done to restaurants, consumers and the couriers it is supposed to protect.”
The companies also claim that the law takes away workers’ flexibility to choose when and how to pick up orders, as 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 meeting minimum wage requirements” by choosing to pay workers an hourly rate or a per-minute rate per delivery — a controversial compromise from the city after feedback from the get company.
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