The big three restaurant delivery apps — DoorDash, Grubhub, and Uber — are suing New York City over the city’s new minimum wage law passed last month, which nearly triples the delivery worker minimum wage from $7.09 to $19.96 per hour, once the law is fully phased in in 2025. DoorDash and Grubhub filed their lawsuit jointly with the New York State Supreme Court, while Uber filed its lawsuit separately in the same court. The DoorDash and Grubhub lawsuit calls the new rule “unlawful, arbitrary and capricious,” and says that it unfairly “threatens to single out and punish” food delivery services.
The contracted worker protection law is the first of its kind nationally and gives third-party delivery apps the choice of paying delivery drivers per trip, per hour, or via their own formula. However, if delivery companies choose to pay workers via trip time, they would have to pay 55 cents per minute, which adds up to $33 per hour, more than double the city’s current minimum wage rate. Likely in response to these changes, DoorDash recently announced two new ways for contracted delivery workers to earn money: by time (via a guaranteed minimum hourly rate) or by individual offer, which is the original earning mode that DoorDash had already been using to pay its Dashers.
DoorDash has reiterated that the company has no problem with the city raising the minimum wage for these contracted delivery workers, but instead takes issue with the rule’s flaws, which include lack of flexibility, making it very difficult for delivery apps to offer delivery options via trip time, since that would quickly add up to a sky-high pay rate.
“Thousands of workers, tens of thousands of merchants, and millions of consumers use third-party platforms across the five boroughs,” DoorDash said in a published statement. “This is exactly why we – and others – clearly and repeatedly warned the city that using this flawed process to underpin this minimum pay rate 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.”
During the original announcement of the new law, the DCWP said that the survey found delivery workers spend approximately 40% of their time waiting for orders to come in and 60% of their time actually on-call. The government agency argues that once the law goes into effect, a worker paid via trip time should get the same amount as if that same worker working the same number of hours were to be paid via both trip time and on-call time.
However, DoorDash argues that the survey conducted by the New York City Department of Consumer and Worker Protection which preceded the creation of the new rule was “flawed and subjective.” According to their lawsuit, DoorDash and Grubhub allege that the DCWP is artificially inflating pay standards by requiring delivery apps to pay delivery workers for time spent not working. The lawsuit also argues that by excluding grocery delivery workers from the new law, the rule is unfairly targeting third-party restaurant delivery apps.
“If allowed to stand, this rule will have serious adverse consequences for delivery partners, consumers and independent businesses,” a Grubhub spokesperson said in a prepared statement. “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.”
Grubhub and DoorDash are asking for a temporary restraining order pending a hearing on a preliminary injunction of the new minimum wage rule. Eventually, the companies hope that the rule can be annulled until a different law can take its place.
Uber similarly feels that the city’s survey and subsequent rule are based on flawed logic and false assumptions:
“The city’s entire rule depends on the false assumption that restaurants make no money on deliveries - it must be paused before damaging restaurants, consumers and the couriers it purports to protect,” Uber spokesperson Josh Gold said in a statement sent to media.
NRN reached out to the New York City government officials for comment on the pending lawsuits.
Contact Joanna Fantozzi at [email protected]