July 6 – Uber Technologies Inc, DoorDash Inc, and other app-based food delivery companies have filed lawsuits on Thursday in an attempt to challenge New York City’s unique law that establishes a minimum wage for delivery workers.
The companies have filed separate complaints in a New York state court. They claim that the law, which will start on July 12, is based on a misunderstanding of how the food delivery industry operates. Grubhub Inc has joined DoorDash in the lawsuit.
According to the new law, companies will be obligated to pay delivery workers $17.96 per hour, and this hourly rate will increase to almost $20 by April 2025. Companies have the option to choose whether they want to compensate their workers on an hourly basis or per delivery. This decision is typically determined by the number of hours the workers are actively using the app.
According to the companies, delivery apps would have to increase the number of trips completed per hour in order to accommodate the new labor costs. This would result in them having to reduce the service areas they cover, which could negatively impact both consumers and restaurants.
In May, both Uber and DoorDash raised their annual earnings forecasts because they exceeded expectations for quarterly revenue. This was due to a rise in orders for food, groceries, and convenience products.
Relay Delivery Inc has also taken legal action in the same court, arguing that the law will force the New York-based company to shut down unless it increases the fees it charges to restaurants.
Vilda According to Vera Mayuga, who is the head of the city’s Department of Consumer and Worker Protection, she believes that the law will be beneficial in lifting thousands of workers out of poverty.
Mayuga expressed disappointment in the stance taken by Uber, DoorDash, Grubhub, and Relay regarding fair pay for delivery workers. He believes that all workers, including delivery workers, should be compensated fairly for their labor.
Those who are in favor of the law, which is the first of its kind in the United States, argue that it is necessary because delivery workers in the city typically earn around $11 per hour after accounting for expenses. This amount falls significantly below the city’s minimum wage of $15.
Delivery workers who work through app-based platforms are typically classified as independent contractors instead of being considered employees of the company. As a result, they are not covered by general minimum wage laws.
The companies involved in the lawsuits filed on Thursday claim that city officials used flawed studies and statistics to justify the law.
According to the companies, they believe that the city’s surveys of delivery workers were biased and intentionally crafted to obtain responses that would support the argument for implementing a minimum wage.
The lawsuits also argue that the law assumes, without evidence, that restaurants don’t make much profit from app-based orders. They also claim that the law places excessive recordkeeping demands on restaurants.
DoorDash stated in a press release that the rulemaking process, which they believe to be flawed and biased, has further exacerbated the issues with the existing policies.
The companies claimed that the city had violated a state law that prohibits rules that are considered “arbitrary and capricious.” They want to obtain orders that prevent the law from being enforced temporarily, while the lawsuits are ongoing. Ultimately, they hope for rulings that permanently invalidate the law.