/cdn.vox-cdn.com/uploads/chorus_asset/file/24435543/021523_deliverista_1.jpg)
This story was originally published on July 6 by THE CITY. Sign up here to get the latest stories from THE CITY delivered to you each morning.
By Claudia Irizarry Aponte, THE CITY
App-based companies that account for nearly all the food deliveries in the city filed suit Thursday to stop a new law raising worker wages — days before it is set to take effect.
DoorDash, Grubhub and Uber are aiming to stop the law that would, on July 12, require them to begin paying delivery workers $17.96 an hour and make New York the first major U.S. city to set pay requirements for its estimated 60,000 delivery workers.
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, a significant boost from the estimated $11 per hour delivery workers currently earn. 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 also force them to pass on added costs to consumers and potentially drive away business — and claim bias from the city Department of Consumer and Worker Protection (DCWP), the agency that carried out 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.”
The 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 filed a separate lawsuit. Those three companies and Relay, another major player opposed to the law, are collectively responsible for 99% of app deliveries in the city, according to estimates from the city. Relay did not immediately say whether it is joining the other companies in pursuing legal action against the city.
It’s now up to the courts to decide whether the city can proceed with its plan to force the companies to pay workers the $17.96 minimum wage as soon as next week.
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.”
Vilda Vera Mayuga, the DWCP commissioner, said the agency is “disappointed that Uber, DoorDash, Grubhub, and Relay disagree” that delivery workers “deserve fair pay for their labor.”
“The minimum pay rate will help uplift thousands of working New Yorkers and their families out of poverty,” Mayuga said in a statement. “We look forward to the court’s decision and to apps beginning to pay these workers a dignified rate starting July 12th.”
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.
All three companies are seeking a preliminary injunction and temporary restraining order to stop the law from going into effect.
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 comes just 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.”
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.
THE CITY is an independent, nonprofit news outlet dedicated to hard-hitting reporting that serves the people of New York.
This high minimum wage is killing businesses, especially small businesses. Your delivered pizza is now going to cost fifty dollars.
If you can’t afford to pay your workers a livable wage, you should not go into business. Full stop.
Absolutely. I remember when the owner of Gabriela’s Mexican Restaurant gave an interview during which she gave examples of the many challenges she faced, like not being able to afford any more than the $8 an hour they were paying the woman who made their tacos. Gabriela’s was packed all the time and it was not inexpensive, by the way.
My thought at that moment was if you can’t pay workers a decent wage, you don’t have a business.
Gabriela’s no longer exists. Perhaps the owner was telling the truth.
So the 20,000 monthly rent is ok it’s the $1.00/hour per employee that’s killing the goose?
The bank takes 4 – 5% of the amount charged on the credit card and the delivery apps take 20 – 30% of the restaurant’s gross. That’s the problem here. We’d be better off killing Grubhub and Seamless and going back to deliveries controlled by the restaurants, using the restaurants’ own employees, on pedaled bikes, with 8 – 10 block limits on deliveries.
Sad that so many here think the “greedy” (lol) delivery workers are the problem.
High minimum wage? It’s just equating the minimum wage for these workers to the minimum of $15 for all other work. I see no reason why Uber and Grubhub should have an exemption from minimum wage laws.
Consider this a convenience fee. Look what you pay in service charge to order event tickets online. And you print your ticket at home. Convenience comes at a price. Or you could walk over and pick it up yourself?
Not equal. 17.96 is almost 20% more than 15.00. And the minimum wage for tipped workers is even less. Not saying this rate is right or wrong. This is just math.
$19.96 an hour by 2025, in an industry, where heavy tipping is standard. That might have to change. If I used these app I’d definitely tip less.
The idea behind the higher minimum is the delivery workers have expenses that employees don’t. Most obviously their bikes.
Delivery workers need to be compensated enough that they can afford to charge their bikes safely. Enough with building fires.
Food delivery is already shocking expensive. Buying a $20 item really means paying $40, after taxes, service fees, tips, etc. To say nothing about the frequent delays.
No thanks, I’ll walk the 3 blocks.
It isn’t that food delivery has become more expensive, it’s that we as a society are reevaluating how everyone is entitled to a livable wage, healthcare, sick pay, and a job that doesn’t cause any physical or psychological harm in the long run. The best way to ensure this is to make sure people, regardless of the type of job they work, can earn enough to live, eat, save, and plan for their futures. Everybody benefits in the long run, and the CEO’s and shareholders of these companies will barely feel the impact.
Nobody cares about the CEOs and shareholders of the delivery companies. It’s the customers and the restaurants people are concerned about. When did a food delivery job ever come with health insurance? That’s why we should have universal healthcare like every other advanced country.
People are going to get fewer deliveries and restaurants are going to make less money and tips will go down to make up for the higher price. Or maybe it will finally inspire people to give up those delivery apps, that would be the best possible outcome by far.
If by “entitled” you are referring to rights, those are in the Constitution. Free speech, voting, etc. Those don’t come at a financial cost. Jobs and Healthcare aren’t rights, they are commodities, meaning someone has to pay for them. In this case, we the consumer. Until all of these other commenters follow through and do indeed stop using these exorbitantly expensive services, at which point you bet the shareholders will sit up and take notice
Many NYC restaurants have razor thin profit margins and are barely staying alive. There’s a limit to how much of their high expenses they can pass on to customers. This will be an added cost that will likely cause more restaurants to close.
This is one more example of how progressive policies are hurting the city.
Fortunately, there are metrics that can be used to determine if one’s gut feelings are or are not correct. The Rag documented that over 100 new businesses have opened this year in this neighborhood. Many are restaurants.
Eater NYC (a website) updates new restaurant openings in the City weekly. Citywide? We’re averaging 18 – 20 new ones a week.
It would seem that the facts don’t support your fears.
Oh, and on this specific? The delivery workers work for the apps, not the restaurants. And the apps usurp 20 – 30% of restaurant receipts. Consider aiming your arrows at the real culprits.
Agreed. Everyone keeps talking about how this will hurt the deliveristas and the restaurants. But why is the person delivering $100 worth of food getting $15 while the app that tells him to deliver it gets $30 and the restaurant that supplies and makes the food gets $70? How about the apps take the money they were going to pay out to shareholders and use that for the wage increases?
Agreed, there are a lot of restaurants opening in NYC but restaurants also have a very high rate of failure. What’s your point?
The increased salaries for the delivery people will ultimately be passed onto restaurants, hence the consumer.
There’s a limit to how much consumers are willing to pay for a meal. You don’t have to be a genius to see how this will impact restaurants which – even the most successful ones – tend to have thin profit margins.
What’s my point?
Obviously my point is that if you were correct about the expense burden on restaurants in NYC then there wouldn’t be 18 – 20 opening every week.
If your business depends on people working bellow minimum wage to stay alive, you do no have a business worth much. Anyway this is in no way an attack on restaurants. This is a call for multi-billion corporations to get their act together and stop exploiting people.
If restaurants need to pay below minimum wage to their delivery workers to survive, then they need to re-tool to do more pickup and in-person orders. We all survived before these delivery apps when each restaurant hired their own delivery workers. Why would any restaurant do that nowadays when they can hire contractors at below minimum wage?
No matter how much the restaurants complain about the fees paid to the apps, they are better off not having to hire a delivery crew and manage their employment.
For years we have been placing orders directly with local restaurants (not through any apps or intermediaries) and then walking to pick it up. Our reason is not just saving ourselves cost. These relatively recent apps take an outrageous portion of the restaurant’s revenue – as much as 30%. It can actually be a losing proposition for the restaurant, but they feel they can’t afford to lack presence on the top delivery apps. It’s like extortion (“nice restaurant ya got here, it’d be a shame if nobody ordered from it…”).
Support local businesses. Buy directly, and pick it up yourself if they don’t hire and pay their own delivery people. And if you do take delivery, please tip well in cash. They work hard.
…Now, if we could just get them to stop mowing down pedestrians in crosswalks and breaking all traffic laws on eBikes…
I thought minimum wage in NYC was $15? Why the $17.96 number for the delivery workers then?
It takes into account the fact that they have to pay for and maintain a vehicle to do the work.
Do the delivery persons have liability insurance for when they hit folks with their electric bikes speeding along? It should be required as well as licensing.
Most have been hit and runs…
No delivery worker should earn another penny unless they are required to have license plates, insurance, and an easy way to be identified. They should be required to have a GPS locator on their vehicles so they can be identified in case of accidents.
Expenses – just like Uber drivers get extra on top of minimum wage to account for the cost of their car ownership. There is the cost of the bike, the insulated bag, battery charging, maintenance, etc.
Do you really think all that adds up to $4/hour? The cost of buying and maintaining a bike are much less than buying and maintaining a car.for Uber.
That should say $3 for maintenance, not $4. Is there a way to edit your own commemts?
Delivery Aps are NOT your local business, to be clear.
Delivery Aps siphon away a substantial percentage of what previously went to the local owners.
While business sign on in the hope to retain, or possibly increase customers, these companies often do more damage than good.
If you want to help your local businesses, contact them directly, possibly even get your hind-parts off the sofa and go see them face to face, the walk may do you good too.
Agree, yet many businesses force customers to use this apps for deliveries. And when this is their policy, I order from someplace else.
I used to have a drawer full of menus but I stopped doing phone orders because I was told repeatedly to GO ONLINE. Someone at a very popular restaurant hung up on me and said NOT MY PROBLEM when I told them I didn’t have a computer (I also had a flip phone). I finally caught up with tech and started using apps but after Covid I could no longer afford to pay the ‘service fee,’ and the ‘delivery fee,’ on top of the tip. I walked into a Chinese restaurant yesterday to place a take-out order and I was instructed to USE THE KIOSK, and the kiosk included a screen for a tip, lol.
At least this is more fair than turning the 72nd St subway triangle into a charging station for delivery bikes. In this case the people who use the services will be paying, not those of us who do not order delivery
Don’t think for a moment that any increases will not affect what you are charged, in house or delivery. We will all end up paying.
That said, I fully support paying these delivery people a living wage. I just hate to see most of it go to delivery apps.
I think many restaurants will drop these apps and go back to having their own delivery guys. I think the apps themselves believe this. If it was going to be as simple as.raising prices for the consumer_without losing business why would they fight if?
If the current wage is $11/hour, that is $4 below the current minimum wage for hospitality workers. So by all means, they should have their hourly wage raised to $15 to keep on par with other hourly workers in the food industry. But $19/hour? REALLY? What is THAT about?
Not only does it seem unnecessarily excessive, but I also think it is time that wages for delivery workers be tied to “performance” where traffic laws are concerned. Why do we keep “rewarding” them for riding on sidewalks, going the wrong way on one-way streets, going through red lights, and generally disobeying traffic laws and terrifying pedestrians?
There needs to be a re-think of this entire situation.
I do not often agree with Ian, but I do here. Now if the extra charge is for the bike license & insurance ( or for exchanging an electric bike towards a regular bike at least ) – I’m all for that!
One thing is for sure – there will be fewer delivery drivers sat around waiting for a gig now. The number of these guys seems have exploded in recent years, a bit like Uber back in the day. With this new minimum wage and the regulations around it I can’t image there will be too many under utilized workers waiting on the streets.
Many seem to hang out on Ninth Avenue which has an expanded bike lane
These apps make way more money than delivery driver you get $10 they get $28 sometimes … Uber make money from every single delivery millions of dollars…
Some days I do 12 hours just to make $120 and I’m not on no bike I’m in a Tesla performance so maintenance crazy for me one tire $700
So sorry I don’t feel bad for no billion dollar company
This is a tipping business. On top of service fees, delivery fees, taxes, plus higher than minimum wage base. This way too much!
Fair wages is all good. But then this is no longer a tipping system. And consumers are still going to see an increase even without it.
Exactly – if a ‘fair wage’ will be paid, then why would they also expect to be tipped? That’s the reasoning behind a livable wage. Everything above that is discretionary.
is there any research on restaurant profits before and after delivery apps, and restaurant prices before and after delivery apps?
Let the market decide. If it costs too much to deliver your burrito you might consider walking a few blocks to pick it up. Food delivery, like taking cabs, Ubers, or Lyft is a privilege reserved for those who can afford it. Privilege comes with a price. Many people cook or pick up their own food. Everyone deserves a fair wage. Restaurants managed before Ebikes arrived. They will again.