Food Delivery Companies Challenge New York City Minimum Wage Law

Uber, DoorDash and other app-based food delivery companies are pushing back against a minimum wage law set to take effect in New York City.

The law, which will take effect July 12, requires companies to pay delivery workers $17.96 an hour, rising to nearly $20 per hour by April 2025, Reuters reported Thursday (July 6). But the companies said the labor costs could make it unfeasible to provide some services.

Grubhub and Relay Delivery have also filed lawsuits against the law. In its lawsuit, DoorDash said, per the report: “This fatally flawed and subjective rulemaking process unsurprisingly worsened these already problematic policies.”

However, Vilda Vera Mayuga, head of the city’s Department of Consumer and Worker Protection, disagreed.

“Delivery workers, like all workers, deserve fair pay for their labor, and we are disappointed that Uber, DoorDash, Grubhub and Relay disagree,” she said, according to the report.

The companies argued that the law is based on flawed studies and statistics, and that the city’s surveys of delivery workers were biased and designed to justify a minimum wage, the report said. Supporters of the law argued that delivery workers in the city currently earn about $11 an hour on average after expenses, which is below the city’s $15 minimum wage.

The rise of the food delivery driver minimum wage was announced in June.

The companies are seeking orders to block the law from taking effect and permanently strike it down, per the report. Ultimately, the lawsuits could have a significant effect on consumers and restaurants, as the need to increase the number of trips completed per hour to absorb the labor costs could cause service areas to shrink.

PYMNTS research has found that 76% of gig workers live paycheck to paycheck.

In addition, 30% of these workers said they will leave the gig work industry due to low or unpredictable earnings, according to “Living Paycheck to Paycheck: Real-Time Payments for Financial Health,” a PYMNTS and The Clearing House collaboration.

The report also found that restaurant aggregators may lose their gig workers if they cannot compensate them better, but they are also concerned about the hit that pay increases would take on their per-order profit margins.