Uber, Doordash, Grubhub Sue New York City Over Minimum Wage

(RTTNews) - Uber Technologies Inc., the parent of Uber Eats, as well as its rival food delivery companies DoorDash and Grubhub, have sued New York City against its new minimum wage rule for app-based food delivery workers.

Uber filed its case to the Supreme Court of the State of New York, while DoorDash and Grubhub filed a joint suit, in which the companies are seeking a temporary restraining order and a preliminary injunction against the regulation by New York City Department of Consumer and Worker Protection.

The new law, which was announced last month and to be effective on July 12, would increase pay for app delivery workers to $17.96 per hour, excluding tips, which represents around $0.30 per minute. For apps that only compensate for pickup and drop-off time, the worker must earn a minimum of around $0.50 per minute of trip time, excluding tips. The rule is also said to raise pay again in April 2025 to nearly $20 per hour, while the pay would be adjusted annually for inflation.

In order to meet the city's new requirements, companies can either pay workers a flat hourly rate of $17.96 or pay per delivery at about 50 cents a minute, excluding tips.

While announcing the rule, the City had stated that it would uplift thousands food delivery workers, who currently make $7.09 per hour, on average. In September 2022, the Federal Trade Commission had expressed its commitment to protecting delivery workers from unfair practices.

Meanwhile, the food delivery companies argue that it will hurt delivery workers and customers alike. Uber said the rule is based on the false assumption that restaurants lose money on all deliveries.

According to Uber, "The rule would force the apps to shrink their delivery radius." It would also cause immediate and irreparable harm to the firm in the form of lost goodwill with workers and customers and in the form of nonrecoverable costs.

Further, DoorDash and Grubhub alleged that the new regulation is legally flawed as it targets only food -delivery services, while grocery-delivery services are exempted from the rule.

They also argue that the new regulation also would compel the companies to pay workers for hours that they are logged into the delivery apps, even if they don't make any deliveries.

Last year, the companies had filed against the city to fight a rule that they share customer data with restaurants. Earlier in 2021, the three companies also had sued the city over a cap it placed on the commission they could collect from restaurants on the platforms. In these cases, the legal actions are reportedly ongoing.