In a significant legal setback for Uber Technologies Inc., DoorDash Inc., and Grubhub Inc., a New York state appeals court has upheld a ruling requiring these food delivery giants to pay their workers a minimum of $17.96 per hour. The decision, made on Thursday, rejected the companies’ attempts to overturn a prior judgment allowing the implementation of the minimum pay rule.
The ruling mandates that delivery services must either compensate couriers at the established hourly rate or opt for a per-delivery payment structure at approximately 50 cents per minute. The measure, initially delayed pending the court’s decision, aims to ensure fair compensation for food delivery workers in a rapidly growing industry.
This development reflects a broader trend in major cities, including New York, to regulate app-based services, such as ridesharing and food deliveries, as their usage becomes increasingly prevalent. The companies had previously contested various regulatory measures, such as commission caps and the sharing of customer data with restaurants.
New York City Mayor Eric Adams hailed the court’s decision, describing the minimum pay rate as “a powerful tool to hold apps accountable.” Adams emphasized that the rule ensures delivery workers and their families can earn a living wage while sustaining the city’s renowned restaurant industry.
However, Uber, DoorDash, and Grubhub expressed concerns about the potential impact on their operations and the wider implications for the industry. Josh Gold, Uber’s senior director of public policy and communications, argued that the higher wage “eliminates jobs, discourages tipping, and forces couriers to go faster and accept more trips.”
DoorDash warned of significant operational changes to comply with the minimum rate, and a spokesperson stated that the court had overlooked the harmful consequences of the rule. Grubhub, expressing disappointment with the decision, stated that it is evaluating its next steps.
The new law not only establishes the $17.96 minimum hourly pay but also includes provisions for a subsequent raise to nearly $20 an hour in April 2025. Currently, the approximately 60,000 app delivery workers in the city earn about $11 per hour after tips and expenses, whereas the city’s minimum wage stands at $15 per hour. The rule, initially passed in June, underscores the ongoing efforts to provide comprehensive protections for food couriers, following a series of bills enacted in September 2021.
The legal battles, encapsulated in the cases of Uber Technologies Inc. v. New York City Department of Consumer and Worker Protection (155943/2023) and DoorDash Inc. and Grubhub Inc. v. New York City Department of Consumer and Worker Protection (155947/2023), mark a pivotal moment in the ongoing debate over fair wages and labor rights in the gig economy.