Pay hike for app-based workers
New York City is the first in the nation to establish a minimum rate for those who deliver food.
New York City will implement a minimum pay rate for food delivery workers on apps such as Uber Eats and DoorDash — marking a first for the U.S., officials said.
The new rule could nearly triple average earnings for the city’s app-based delivery workers in the coming years. New York’s more than 60,000 delivery workers make an average of $7.09 an hour, according to the city.
But on July 12, a pay rate of $17.96 an hour will take effect — and that minimum wage is set to rise to $19.96 by April 2025, the city said. For years following, the minimum pay rate will be adjusted annually for inflation.
“Our delivery workers have consistently delivered for us — now, we are delivering for them,” Mayor Eric Adams said in a Sunday statement announcing the Department of Consumer and Worker Protection’s new rule. “This new minimum pay rate, up by almost $13.00/ hour, will guarantee these workers and their families can earn a living, access greater economic stability, and help keep our city’s legendary restaurant industry thriving.”
Ligia Guallpa, executive director of the Brooklynbased Worker’s Justice Project, called the move a “historic moment for New York City” — as labor organizers across the country call for better pay and improved working conditions for gig workers, who often face unreliable earnings and few safety protections.
“This rule will set the pay floor for all the essential deliveristas who work tirelessly — whether through a pandemic, a snowstorm or wildfire smoke — and who have been denied a living wage for far too long,” Gullapa said in a statement. “While there’s still work to do, a minimum pay rate for food delivery workers will transform the lives of thousands of families across the city and deliver long overdue justice for deliveristas.”
While Guallpa and others applauded New York’s new minimum pay rate, food delivery services including Uber Eats and DoorDash have pushed back, arguing that the decision could have unintended consequences for app workers.
“The city is lying to delivery workers — they want apps to fund this increase by eliminating jobs and reducing tipping while forcing the remaining workers to deliver orders faster,” Uber Eats spokesperson Josh Gold said in a statement.
Grubhub, which noted that it believes the city “had good intentions,” also expressed disappointment and similar concerns over the rule.
DoorDash said it may pursue legal action.
“Given the broken process that resulted in such an extreme final minimum pay rule, we will continue to explore all paths forward — including litigation — to ensure we continue to best support Dashers and protect the flexibility that so many delivery workers like them depend on,” DoorDash said in a statement.
Under the new rule, food delivery services will have some flexibility in how they pay new workers. Apps can choose whether they want to pay delivery workers per trip, per hour worked or according to another policy created by the company — as long as earnings meet the minimum rate, the city said.
With the $17.96 minimum rate taking effect next month, apps that pay workers for all the time they are on call (connected to the app) will be required to pay about 30 cents a minute, not including tips. For apps that compensate only for trip time, that rate will be about 50 cents a minute, not including tips, in 2023 — and is expected to rise to 53 cents a minute in April 2024 and 55 cents a minute in April 2025, plus inflation adjustments.
The future rate of 55 cents a minute could add up to $33 an hour of trip time — but drivers are rarely able to spend all of their shifts on trips. The Department of Consumer and Worker Protection found that workers spend about 60% of their working time engaged in trips and 40% on call.
The implementation of the minimum pay rate follows a law passed by the New York City Council in 2021, which required the Department of Consumer and Worker Protection to study the working conditions and pay of app-based food delivery workers and establish a minimum rate.
The study was published last year, and this week’s final rule was established after a public comment period. The minimum wage takes into account that app-based workers are classified as independent contractors — who often must pay out of pocket for expenses and do not have workers’ compensation insurance or paid time off.
Supporters of the new minimum pay rate include Senate Majority Leader Charles E. Schumer (DN.Y.) and labor organizers.
The Justice for App Workers coalition called the move a “step forward” but said that further protections are needed, pointing to the potential of workers being locked out of their delivery apps while on the job.
“As it stands, the way the city designed this raise could lead to lockouts, which could leave us worse off than we are now. If a worker is locked out of an app without warning, they just won’t be able to make enough money that day. It doesn’t have to be this way,” Justice for App Workers said in a statement.
“This is a good measure, but we also need assurances that ensure delivery workers will not be locked out at a moment’s notice,” the coalition said. “These jobs are all we have to cover paying our rent and feeding our families.”