NYC minimum wage for delivery drivers upheld by appeals court

A New York state appeals court has turned away a challenge by Uber Technologies Inc and other companies to New York City‘s novel minimum wage law for app-based delivery workers, allowing it to take effect.

The Manhattan-based Appellate Division, First Department on Thursday denied appeals by Uber, DoorDash Inc and Grubhub Inc after a state judge rejected their claims that the law unfairly targets their food delivery services.

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The court in September had temporarily blocked the law while it considered the appeals.

The law will require companies to pay delivery workers $17.96 an hour, which will rise to nearly $20 in April 2025. Companies can decide whether to pay workers hourly or per delivery, which would be based on the hours workers log into the app.

Uber, DoorDash, Grubhub Inc and a smaller food delivery service, Relay Delivery Inc, claim the law will force them to shrink service areas so deliveries do not take as long, ultimately hitting customers and restaurants.

In September, state judge Nicholas Moyne had allowed the law to take effect but blocked the city from enforcing it against Relay pending the outcome of the case. The judge said that unlike the other companies, Relay cannot immediately raise the fees it charges to restaurants and needs time to renegotiate its contracts.

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The appeals court on Thursday denied the companies’ appeal without explanation. DoorDash in a statement said the court had “chosen to ignore the harmful consequences such a misguided minimum pay rule will cause, and failed to justify its decision to allow the City to pick winners and losers in how it is applied.”

Spokesmen for Uber and Grubhub in separate statements said the companies were disappointed with the decision.

New York City Mayor Eric Adams, a Democrat, said the decision was a major victory for delivery workers.

“This minimum pay rate will guarantee our delivery workers and their families can earn a living and keep our city’s legendary restaurant industry going strong,” Adams said in a statement.

Supporters of the city’s law, which is the first of its kind in the United States, say it is needed because delivery workers in the city earn about $11 an hour on average after expenses, far below the city’s $15 minimum wage.

App-based delivery workers are usually treated as independent contractors rather than company employees, so general minimum wage laws do not apply to them.

Uber and the other companies filed separate lawsuits in July, which were consolidated. They say city officials based the minimum wage law based on flawed studies and statistics.

The companies allege that the city’s surveys of delivery workers were biased and designed to elicit responses that would justify a minimum wage.

But Moyne in September said the companies overstated the importance of those surveys to the city’s legislative process. The judge also rejected several other claims, including that the law was invalid because it covers workers who deliver food from restaurants but not from grocery and convenience stores.

The cases are Uber Technologies Inc v. New York City Department of Consumer and Worker Protection and DoorDash Inc v. New York City Department of Consumer and Worker Protection, New York State Supreme Court, Appellate Division, First Department, Nos. 2023-04880 and 2023-04881.

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