New York City faces lawsuits from food-delivery companies regarding legislation on minimum wages

New York City faces lawsuits from food-delivery companies

Uber, DoorDash, and Grubhub are suing New York City, alleging that the city relied on inaccurate data to determine the minimum pay for food delivery workers and arguing that the new regulations will negatively impact consumers.

The three major food-delivery companies have filed a request for a temporary restraining order in the State Supreme Court of Manhattan, aiming to halt the implementation of the wage changes scheduled for July 12. Relay, a smaller New York-based food delivery platform, has also taken the same legal action.

The recently announced pay standard would mandate gig platforms to compensate food delivery workers around $18 per hour, with a further increase to $20 per hour by 2025. Presently, delivery workers earn approximately $11 per hour based on the city’s estimate.

Uber and other companies in the gig economy assert that they will be compelled to transfer the burden of higher wages to consumers through increased prices. They argue that the city’s calculations fail to accurately gauge the extent to which these elevated prices will harm local restaurants. Moreover, they contend that the new system will disadvantage delivery workers since the companies will need to rigorously monitor their online time on the apps rather than actual deliveries in order to control costs.

Uber spokesperson Josh Gold stated, “The rule must be paused before damaging the restaurants, consumers, and couriers it claims to protect.”

Commissioner Vilda Vera Mayuga of New York City’s Department of Consumer and Worker Protection defended the new wage standard, emphasizing that delivery workers deserve fair compensation for their labor.

This legal battle over delivery worker pay in New York reflects an ongoing conflict between gig companies and labor activists nationwide regarding worker compensation and treatment. Gig delivery workers, classified as independent contractors, do not receive a minimum wage or health benefits and are responsible for their own expenses. While gig companies argue that workers value the flexibility of their schedule and independence, labor groups assert that these workers are being exploited and demand better protections.

Delivery workers themselves have long voiced grievances about inadequate compensation for the demanding and sometimes hazardous nature of their work, spending hours each day ferrying passengers and food across cities. Generally, food delivery workers earn less than those who transport people.

Ligia Guallpa, the executive director of the Worker’s Justice Project, a labor advocacy group that advocated for the law, criticized the lawsuits, stating that they come at the expense of workers who are already struggling in a city grappling with a significant affordability crisis.

Several states have already enacted minimum pay standards for gig workers. In California, gig companies supported Proposition 22, a voter-approved ballot measure in 2020 that provided delivery workers with a minimum wage and limited benefits while categorizing them as non-employees. Similar laws have been passed in Washington state and Seattle, which implemented a minimum wage law for gig delivery workers in 2020. Minnesota’s legislature passed a bill earlier this year guaranteeing a minimum wage for gig drivers, but Uber and Lyft threatened to leave the state or parts of it in response, leading Governor Tim Walz to veto the legislation.

In New York, the agreed-upon $18 per hour pay rate was a compromise after an initial plan to pay delivery workers $23 per hour was abandoned. Terri Gerstein, a workers’ rights lawyer at Harvard Law School’s labor center, believes that the gig companies will face challenges in court, as the city displayed seriousness and caution in implementing the pay standard. She stated, “Uber and other companies have to show that the city was ‘arbitrary and capricious’; based on the record, it will be very hard for them to do that.”