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Gig economy companies DoorDash, Grubhub, and Uber sued New York City on Thursday over a new minimum wage law for app-based delivery workers that would raise their minimum wage to $17.96 per hour. The law, which was implemented in mid-June, is the first of its kind in the U.S, and would go into effect July 12.
DoorDash and Grubhub, which specialize in food delivery, filed a joint lawsuit against the city’s Department of Consumer and Worker Protection (DCWP) and its commissioner. Uber, which deals both in food delivery and ridesharing, filed a separate lawsuit on the same day.
“Bad policies cannot go unchallenged, and we will not stand by and let the harmful impacts of this earnings standard on New York City customers, merchants, and the delivery workers it was intended to support go unchecked,” a DoorDash spokesperson told Motherboard in an email. “We—and others—clearly and repeatedly warned the city that using such a flawed process to underpin its rulemaking would have lasting and harmful impacts for all New Yorkers who use these platforms, but the approach that DCWP took was sadly not one that reflected this, and has left us no choice but to take our concerns to court.”
DCWP Commissioner Vilda Vera Mayuga told Motherboard in a statement, “Delivery workers, like all workers, deserve fair pay for their labor, and we are disappointed that Uber, DoorDash, GrubHub, and Relay disagree. These workers brave thunderstorms, extreme heat events, and risk their lives to deliver for New Yorkers—and we remain committed to delivering for them. The minimum pay rate will help uplift thousands of working New Yorkers and their families out of poverty. We look forward to the court’s decision and to apps beginning to pay these workers a dignified rate.”
The new law planned to raise the minimum wage of app-based delivery workers in the city to $17.96 per hour on July 12, and subsequently to $19.96 per hour by April 2025, when it would be fully phased in. A press release from the city at the time stated that delivery workers currently earn around $7 per hour on average. Most food delivery apps pay workers by the delivery and drivers often greatly rely on customer tips to be their main source of income. Motherboard has previously reported that DoorDashers, for example, often only get a base pay of $2 or $3 per delivery, and get about two-thirds of their income from customer tips. The law, then, would mean an overall increase of around $13 per hour.
DoorDash argues in its lawsuit, however, that the law is improperly implemented, because it would force companies to pay workers for any time logged into the app, regardless of whether they were delivering or not, and that the DCWP ignored “mountains of hard data and analysis, and over emphatic objections from a range of constituents” in order to implement it.
“Although Petitioners are not opposed to a well-constructed minimum-pay standard for delivery workers (and, indeed, have supported such standards in other jurisdictions), the implementation of this ill-conceived Rule will have drastic—and immediate—consequences for all concerned parties,” the lawsuit states.
In a post on its website, DoorDash further explained its claim. “The earnings standard does not reflect the way the industry operates,” the post reads. “For instance, why would the agency choose to purposefully exclude companies that only facilitate grocery deliveries from its study and rulemaking, when those that facilitate both restaurant and grocery deliveries from local businesses would have these rules apply to them? A worker can now be subject to different legal standards for identical orders from identical local businesses, based solely on the platform they choose to accept the order from.”
DoorDash and Grubhub are seeking a temporary restraining order and preliminary injunction against the rule before it goes into effect.
“If allowed to stand, this rule will have serious adverse consequences for delivery partners, consumers and independent businesses,” a Grubhub spokesperson told Motherboard in an email. “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.”
An Uber spokesperson did not immediately respond to a request for comment.
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