Delivery-app companies sued New York City on Thursday over a law that requires them to start paying tens of thousands of delivery workers a minimum wage starting next week.
DoorDash DASH, -2.63%, Uber UBER, -3.55% and Grubhub filed lawsuits against the city, which announced the law last month. It mandates that delivery workers must be paid $ 17.96 an hour without tips by July 12, and at least $ 19.96 an hour by 2025 — above the city’s minimum wage for other workers.
The companies are taking issue with the fact that the law requires them to pay the workers, whom they consider independent contractors, for the whole time they’re logged into the apps. That’s a departure from the usual way the companies pay the workers, which is from when workers first accept a delivery until they deliver it.
Unless courts block its implementation, the law would be the first of its kind to take effect in the nation. Seattle passed a minimum-wage ordinance for delivery workers last year, but it doesn’t take effect until next year.
In its lawsuit filed with the Supreme Court of New York, Uber said it would suffer “irreparable harm” if the law were to stand, in that it would “have to pass the increased costs of the Challenged Rule on to consumers” and “divert significant product and engineering resources away from planned projects and towards building new technologies to restrict courier access” and to comply with the law. Uber estimated that the law would cost it $ 100 million to $ 200 million for the remainder of the year, an amount that it said would be unrecoverable even if the law were to be overturned later.
DoorDash and Grubhub’s joint lawsuit, filed with the same court, also warned of higher prices for consumers, decreased demand for courier services, and fewer delivery options for restaurants and other merchants. The companies said they would suffer “damage to their business relationships, reputations, and goodwill” and “significant monetary damages that are difficult to quantify and unrecoverable” even if the law were to be overturned.
In their lawsuits, the three big delivery companies called “arbitrary” the exclusion of rival grocery and convenience third-party delivery apps, such as Instacart, from the law, citing that as just one example of what they called the city’s “flawed rulemaking.”
Relay Delivery, which provides delivery workers to restaurants but does not have a consumer-facing app, also sued the city and said it did not like being lumped in with the other three companies. The company said in its lawsuit that the law “imperils Relay’s very existence” — mainly, it said, because it would have to pass additional costs on to restaurants only.
The city agency that drafted details of the law said it is looking forward to the law’s implementation next week.
“Delivery workers, like all workers, deserve fair pay for their labor, and we are disappointed that Uber, DoorDash, GrubHub, and Relay disagree,” Department of Consumer and Worker Protection Commissioner Vilda Vera Mayuga said in a statement Thursday. “The minimum pay rate will help uplift thousands of working New Yorkers and their families out of poverty.”
New York City Comptroller Brad Lander, lead sponsor of the minimum-wage bill, on Thursday pointed out that gig companies have repeatedly sued New York City over worker-related laws. “No surprise that Grubhub, DoorDash, and Uber are out to extract every penny they can from the delivery workers whose labor they rely on: that’s the gig business model,” he said in a statement.
From our archives (March 2023): Uber and Lyft drivers receive a delayed raise after three strikes and a lawsuit in New York
Ligia Guallpa, the executive director of the Worker’s Justice Project, which helps organize low-wage workers in New York City, said in a statement that “it’s unconscionable” that the companies “continue to do everything in their power to prevent New York City’s more than 65,000 app-based delivery workers from earning a livable wage.”
Delivery workers in the city won a broad set of protections in 2021, including the minimum wage that the companies are challenging. That minimum wage was supposed to take effect earlier this year, but its details were announced just last month.