Three major delivery-app companies, DoorDash, Uber, and Grubhub, have filed lawsuits against New York City over a recently announced law that mandates them to pay delivery workers a minimum wage. According to the law, delivery workers must receive $17.96 per hour without tips by July 12, and at least $19.96 per hour by 2025, surpassing the city’s baseline minimum wage for other workers.
The crux of the companies’ contention lies in the requirement to pay workers for the entire time they are logged into the apps, as opposed to only compensating them from when they accept a delivery until its completion. The companies argue that these workers should be classified as independent contractors.
If implemented, this law will be a groundbreaking move in the United States. Seattle passed a similar ordinance for delivery workers last year, but it will not take effect until next year.
In a lawsuit filed with the Supreme Court of New York, Uber expressed concerns about the potential “irreparable harm” it would face if the law were to stand. It highlighted the need to pass on the increased costs to consumers, redirect significant resources from planned projects to develop new technologies for courier access restriction, and ensure compliance with the law. Uber estimated that this law would cost them $100 million to $200 million for the remainder of the year, even if it were eventually overturned—an amount they believe cannot be recovered.
The outcome of these lawsuits will determine the future of gig economy workers and could have far-reaching implications for labor regulations across industries.
DoorDash and Grubhub’s Joint Lawsuit
A joint lawsuit filed by DoorDash and Grubhub warns of potential consequences arising from a new law implemented by the city of New York. These consequences include higher prices for consumers, decreased demand for courier services, and limited delivery options for restaurants and other merchants.
Both companies express concern over the potential damage to their business relationships, reputations, and goodwill. They anticipate significant monetary losses that may be challenging to quantify and recover, even if the law is reversed.
Relay Delivery Takes a Stand
Relay Delivery, a company that provides delivery workers to restaurants but does not have a consumer-facing app, has also filed a lawsuit against the city. It asserts that being grouped together with the other companies jeopardizes its very existence. The main reason cited is the need to pass on additional costs exclusively to restaurants.
The City’s Stance
The city agency responsible for drafting the law expresses anticipation regarding its implementation, which is scheduled for next week. The law aims to ensure fair pay for delivery workers, aligning with the principle that all workers deserve adequate compensation for their labor.
Vilda Vera Mayuga, Commissioner of the Department of Consumer and Worker Protection, expressed disappointment with Uber, DoorDash, GrubHub, and Relay’s objection to the law. She emphasized that the minimum pay rate would uplift thousands of working New Yorkers and their families out of poverty.
Advocacy for Workers’ Rights
Ligia Guallpa, Executive Director of the Worker’s Justice Project in New York City, criticized the companies involved in the lawsuit. She stated that it is “unconscionable” that they are making every effort to prevent over 65,000 app-based delivery workers in New York City from earning a livable wage.
A Hard-Fought Victory
In 2021, delivery workers in the city secured a comprehensive set of protections, including the minimum wage currently being challenged by the companies. Although the minimum wage was supposed to take effect earlier this year, its details were only announced last month.