A planned wage increase for tens of thousands of delivery workers hit a roadblock Friday, after a Manhattan judge halted the rollout of a landmark minimum wage law — days before it was set to take effect.
Manhattan Supreme Court Justice Nicholas Moyne issued a temporary restraining order a day after DoorDash, Grubhub, Uber and Relay filed suit to stop the new law, which was set to take effect on July 12.
The four app-based delivery companies — which account for nearly all of the food deliveries in the city — are aiming to stop the law that would require them to begin paying delivery workers $1[ads1]7.96 an hour and make New York the first major U.S. city to implement wage requirements to its estimated 60,000 delivery workers.
Joining Uber Technologies, Moyne’s order temporarily vacates the Department of Consumer and Worker Protection’s June 12 rule, which would provide a significant boost from the estimated $11 an hour delivery workers currently earn.
It is not clear when, or if, the new wage rate will come into effect.
In a statement, the head of the Department of Consumer and Worker Protection said she was “extremely disappointed” by the delay in implementing the minimum wage rate.
“These apps currently pay workers well below minimum wage, and this wage rate will help lift thousands of working New Yorkers and their families out of poverty.” said Vilda Vera Mayuga, head of the city agency that carried out the regulations. “We look forward to a speedy decision so that the dignified rate of pay that workers deserve to earn is not delayed any longer than necessary.”
Los Deliveristas Unidos founder Sergio Ajche described Moyne’s decision as “disappointing” and “sad”.
“These companies have the capacity to pay the minimum wage rate that the city proposed — this is all a game to them,” he said in a phone interview. “They will continue to arm twist because they have the money and the power to do so.”
That the lawsuits came during a week of record heat made the decision even more frustrating, Ajche added. “This is about honoring the work of the 60,000 people who every day risk their well-being out on the street.”
In separate statements, spokespeople for Uber, DoorDash and Grubhub all cheered Moyne’s decision.
“Today’s decision is an early and promising victory for consumers, local businesses and delivery workers across New York City, protecting them from the harmful and lasting effects of an extreme earnings standard that resulted from a fundamentally broken process,” Eli Scheinholtz, a spokesperson for DoorDash said.
“We hope to use this time to work with the city and all stakeholders to come up with a minimum wage rule that doesn’t have devastating consequences for couriers, consumers and restaurants,” said Josh Gold, an Uber spokesperson.
The cases, filed separately in Manhattan Supreme Court, challenge a local law that would increase hourly rates to $19.96 — before tips — by April 2025. 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 generally not opposed to efforts to increase workers’ wages. But the companies argue that the law will force them to pass on extra costs to consumers and potentially drive away business – and argue that the city is biased in its rulemaking.
“For New York City consumers, that would mean — according to DCWP’s own analysis — an industry average increase of $5.18 per order, representing a 15% increase on current costs,” lawyers for DoorDash and Grubhub charged in court papers. “For New York City restaurants and other grocers, it will mean losing access to valuable delivery services that grocers — especially small and independent grocers — cannot replace on their own.”
Relay, a popular app among “deliveristas,” argued in court filings that it should not be included under 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 claim that the city DCWP did not objectively examine the industry and workforce during rulemaking, and that the law singles out app-based food delivery platforms by not including grocery delivery platforms under the rule.
DoorDash and Grubhub filed a joint petition, while Uber and Relay filed separate lawsuits. The four companies account for 99% of app deliveries in the city, according to city estimates. DoorDash, Grubhub and Uber own or operate Caviar, Seamless and Postmates, respectively, other popular delivery apps.
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 .”
The much-anticipated law followed a years-long legislative and regulatory process. The pay scale is mandated by a 2021 local law requiring a minimum wage for app-based food delivery workers.
The minimum wage law was supposed to go into effect in January, but the Adams administration reversed course earlier this year, reopening the public rulemaking process after intense campaigning by 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 they’re still not satisfied,” Ligia Guallpa, a delivery worker campaigner, said of the companies. Guallpa is the executive director of the parent organization of Los Deliveristas Unidos. “I think they will continue to do everything they can to pay the workers as minimally as possible, or continue to delay the process.”
City Comptroller Brad Lander, who as a city councilman introduced the bill calling for minimum wage standards, said the companies “are looking to extract every penny they can from the delivery workers whose labor they depend on: that’s the gig business model.”
The joint DoorDash and Grubhub petition came a week after DoorDash announced it would change its business model nationwide, offering an option to pay workers from $10 to $19 an hour — but excluding workers in New York, California and Seattle , all of which have passed laws. minimum wage standards for workers.
The two companies also argue that the city conducted “biased and unreliable” surveys of workers and industry stakeholders 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 negative 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.”
Meanwhile, Relay argues in lawsuits that it should have been excluded from the law because its business model is different from industry behemoths DoorDash, Grubhub and Uber.
As a platform that connects restaurants directly with couriers, Relay does not have a consumer-facing app and therefore cannot compensate for costs associated with increasing wages to customers — a situation that could put the company in a “death spiral,” according to the lawsuit.
“Relay strongly supports the rights of NYC food delivery couriers to earn a living wage,” said Matt Miller, a spokesperson for the company, in a statement to THE CITY. “However, we believe that Relay has been misclassified with other companies in the area.”
Uber, in a separate lawsuit, similarly argues that the law would be bad for business, and estimated bookings on the app could be reduced by as much as 18%.
“The city’s entire rule hinges on the false assumption that restaurants don’t make money from deliveries,” Uber spokesperson Josh Gold told THE CITY on Thursday. “It must be paused before it harms restaurants, consumers and the couriers it purports to protect.”
The companies also argue that the law would 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 shift.
But as the DCWP said in March, the rules allow businesses “flexibility in how to meet the minimum wage requirement” by choosing to pay workers an hourly wage or a per-delivery rate broken down by the minute — a controversial compromise the city made after soliciting feedback from the companies.