Uber and Other App-Based Food Delivery Companies Sue New York City's Minimum Wage Law

On Thursday, Uber Technologies, DoorDash, and other app-based food delivery firms filed lawsuits attempting to overturn New York City's new law establishing a minimum wage for delivery employees.

Separate petitions were filed in New York state court by the corporations, alleging that the regulation, which goes into effect on July 12, is based on a misunderstanding of how the food delivery sector operates. Grubhub has joined DoorDash's lawsuit. 

The rule requires corporations to pay delivery employees $17.96 (almost Rs. 1,500) per hour, with the rate increasing to nearly $20 (nearly Rs. 1,650) in April 2025. Companies may choose whether to pay employees hourly or per delivery, based on the number of hours they register into the app.

To absorb the higher labour expenses, delivery apps would need to raise the number of trips completed each hour, causing them to limit service regions and damaging customers and eateries, the firms argued.

Both Uber and DoorDash upped their annual earnings predictions in May after exceeding quarterly revenue expectations due to an increase in orders for food, groceries, and convenience goods.

In the same court, Relay Delivery filed a complaint saying that the law will force the New York-based firm out of business unless it hikes the prices it charges eateries. 

Vilda According to Vera Mayuga, director of the city's Department of Consumer and Worker Protection, the law will assist in lifting thousands of employees out of poverty. 

"Delivery workers, like all workers, deserve fair pay for their labour, and we are disappointed that Uber, DoorDash, Grubhub, and Relay disagree," said Mayuga in a statement.

Supporters of the rule, the first of its sort in the United States, argue that it is necessary since delivery workers in the city make roughly $11 (almost Rs. 910) per hour after expenditures, significantly less than the city's $15 (nearly Rs. 1,240) minimum wage.

Because app-based delivery workers are typically classified as independent contractors rather than employees of the firm, normal minimum wage regulations do not apply to them.

According to the corporations which filed the complaints on Thursday, local authorities defended the ordinance with inaccurate analyses and numbers. 

According to the corporations, the city's polls of delivery employees were biassed and aimed to generate findings that would support a minimum wage.

According to the cases, the rule is also predicated on the erroneous notion that restaurants generate little profit from app-based orders and imposes onerous recordkeeping obligations.

"This fatally flawed and subjective rulemaking process unsurprisingly worsened these already problematic policies," said DoorDash in a statement announcing the complaint. 

The firms accused the city of breaking a state statute that prohibits "arbitrary and capricious" restrictions. They are seeking injunctions to prevent the legislation from taking effect while the challenges are pending, as well as permanent judgements to overturn the statute.