Claudia Irizarry Aponte, The City
This article was originally published on Jul 6 6:16pm EDT by 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.
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