NYC Food Delivery Workers Secure Landmark Minimum Pay Rate

By Claudia Irizarry Aponte

On June 11, 2023

After a 3-year campaign by Los Deliveristas Unidos, workers are set to make more than $17 per hour before tips — a compromise that’s left both app companies and some advocates dissatisfied.

App-based food delivery workers in New York City will earn $17.96 an hour before tips beginning July 12, an amount that takes into account their costs of operating, Mayor Eric Adams announced Sunday afternoon.

With the rate, New York will become the first major U.S. city to establish and implement pay requirements for delivery workers toiling in the gig economy.

The hourly rate will increase to $19.96 before tips by April 1, 2025, the mayor said. The standard is a significant increase from the estimated $11 hourly workers currently earn after tips.

Because app-based delivery workers, currently estimated to number 60,000 in New York City, are classified as independent contractors and not employees, they are not currently entitled to a minimum wage. They also do not get reimbursed for expenses, such as purchasing insulated delivery bags.

The mayor made the announcement from the City Hall rotunda, flanked by Department of Consumer and Worker Protection commissioner Vilda Vera Mayuga, lawmakers and workers with Los Deliveristas Unidos, the group that campaigned publicly for three years for better pay and working conditions, including the right to use the bathroom on the job.

Deliveristas members greeted leader Sergio Ajche with an ovation as he approached the dais on Sunday. 

“I feel fortunate to have been one of the people who fought for a better life for ourselves, and so that delivery workers can be finally recognized and be treated to a life with dignity,” he said.

The highly anticipated announcement caps a legislative and rulemaking process more than two years in the making. The pay scale is mandated by a 2021 local law that requires a minimum wage for workers using apps such as DoorDash and Uber Eats. 

“​​This is the American narrative, and it’s an American story to come here and fight on behalf of what you believe is right,” Adams said on Sunday.

“Our delivery workers have consistently delivered for us — and now, we are delivering for them,” he added.

Hourly or Per Trip

The minimum pay standards were supposed to go into effect in January, but the Adams administration reversed course earlier this year, opening up the public rulemaking process again following intense campaigning from several of the major companies impacted.

The rules that go into effect in July give companies two options on how to pay workers, either hourly or on a per-trip basis where workers are paid by the minute.

The city included the two options in part to account for “multi-apping,” when workers toil for more than one platform at the same time.

Companies that choose the hourly route must pay workers $17.96 beginning on July 12 — a rate that accounts for all the time a worker is connected to the platform, including time spent waiting for trip offers and trip time. New York-based Relay is the only major player in the industry currently that already pays workers by the hour.

Those that pay for trip time — from the moment the worker accepts a delivery offer to the moment he or she drops off the delivery — must pay at least approximately 50 cents per minute of trip time, not including tips. 

With the exception of Relay, the other major players in the market (Uber, DoorDash and Grubhub) pay workers on a per-trip basis. Those four companies are collectively responsible for 99% of app deliveries in the city, according to estimates from the city. 

Uber, which heavily opposed the minimum pay rate proposal, outpaces them all. The company, which also owns Postmates, collects approximately 40% of sales in the city, according to a report by McKinsey & Company cited in the DCWP’s minimum pay rate report from November.

Neither Apps Nor Left Happy

For months many of the industry’s largest and most influential players lobbied against the rules, claiming that it would force them to increase prices and ultimately lead to fewer jobs for workers toiling the gig economy.

“The city isn’t being honest with delivery workers — they want apps to fund this increase by quote — ‘increasing efficiency’,” Uber spokesperson Josh Gold said in a statement on Sunday. “They are telling apps: eliminate jobs, discourage tipping, force couriers to go faster and accept more trips — that’s how you’ll pay for this.”

A representative from Grubhub similarly said the city’s rule would have an adverse effect on workers.

This piece was republished from The City.NYC