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NYC legislation establishes minimum payment per trip for delivery drivers

New legislative package also increases tip transparency, access to restrooms

Uber Eats, DoorDash and Grubhub are now required to pay drivers a minimum payment per trip (Photo: Uber Eats)

New York City is quickly becoming one of the front lines in the battle for gig worker protections. 

In May 2020, the city enacted commission caps on third-party delivery services, limiting the amount they could charge partnering restaurants to 15% in an effort to help them weather the economic throes of the pandemic. About a month ago, it made those caps permanent. Predictably, the big three food delivery services, Uber Eats, DoorDash and Grubhub, reacted the same way they did when San Francisco permanently codified a similar set of commission capswith a lawsuit.

But New York City officials are trying to limit food delivery’s bite of the Big Apple by firing back yet again. On Thursday, the City Council approved a legislation package that would improve pay and delivery conditions for the city’s 80,000 drivers, specifically targeting employees of the three major third-party delivery providers. Among the measures, which are supported by Mayor Bill de Blasio, is an unspecified minimum payment per trip, increased tip transparency and restroom access at partnering restaurants.

Less than the bare minimum

The legislation package addresses the pervasive issues facing the city’s third-party delivery economy. For one, because delivery drivers are classified as independent contractors, not employees, they aren’t being paid like employees. According to a survey of 500 food app delivery workers from Cornell University’s Worker Institute, the average hourly wage for a NYC delivery driver, including tips, is $12.21, falling to $7.87 without tips. New York City’s minimum wage is $15 an hour for employees.

Those low wages have resulted in one-third of delivery drivers working seven days a week and another one-third working six days a week, but despite all the time drivers spend at work, delivery companies aren’t making work conditions any better. Around half of delivery drivers say they’ve been in an accident or crash while doing deliveries, and three-quarters of those workers paid for the resulting injuries themselves. The lack of protections also harms the more than half of drivers who have experienced bike theft, of which three in 10 were physically assaulted during those incidents.

New York City’s latest delivery app legislation package should improve things. In addition to establishing a minimum payment per trip, the measures would make apps disclose their tipping policies; eliminate charges for insulated food bags, which often cost drivers up to $50; require restaurants to offer bathroom access to delivery workers; and prevent the apps from charging fees before paying their workers.

Reason for (cautious) optimism

Matt Spoke, CEO of Moves Financial, a fintech company for the gig economy, thinks the new set of provisions will be an essential boon for NYC gig workers, but he warns that poking the bear too much could backfire on delivery drivers and the people fighting for their protections.

“Gig worker protections are critical to ensure that workers in New York City can earn a living while providing such a critical service to New Yorkers, especially during the pandemic. We’re particularly excited about bathroom access finally being addressed at the city level,” Spoke told Modern Shipper. “The balance that needs to be carefully found is ensuring that companies like Uber and DoorDash maintain a sustainable business model while providing workers with a livelihood. Well-intentioned legislation, if not carefully considered, can end up having an adverse effect on gig workers who rely on these apps daily, especially those who may not have other options for income.”

Read: Food delivery companies in NYC face permanent commission cap

Read: Food delivery companies sue NYC over commission caps

Grubhub (NASDAQ: GRUB), for one, doesn’t appear too phased by the new measures.

“These bills are common-sense steps to support the delivery workers who work hard every day for New York’s restaurants and residents,” Grant Klinzman, a spokesman for Grubhub, said in a statement. “Ensuring they receive a living wage and have access to restrooms isn’t just a good idea, it’s the right thing to do.”

The support for the legislation may come as a surprise, given that Grubhub was one of several companies to sue the city over its enacting of permanent commission caps in August. But DoorDash (NYSE: DASH) has also come out in support of the measures.

​​“We recognize the unique challenges facing delivery workers in New York City and share the goal of identifying policies that will help Dashers and workers like them. This is why last year we announced an industry-leading set of initiatives to improve Dasher safety, strengthen earnings and expand access to restrooms. We will continue to work with all stakeholders, including the City Council, to identify ways to support all delivery workers in New York City without unintended consequences,” a DoorDash spokesperson told TechCrunch.

As of this writing, Uber Eats (NYSE: UBER) has yet to issue a statement either in support or opposition of the legislation.

If their statements are any indication, there may be significantly less pushback from the companies against the new package than there was against the city’s commission caps. In their joint injunction against the caps, Uber Eats, Grubhub and DoorDash called the provision “unconstitutional,” expressing that they were being unfairly restricted in their contracts with restaurants. 

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Jack Daleo

Jack is a staff writer for FreightWaves and Modern Shipper covering topics like last mile delivery and e-commerce fulfillment. He studied at Northwestern University, majoring in journalism with a certificate in integrated marketing communications. Previously, Jack has written for Backpacker Magazine and enjoys travel, the outdoors, and all things basketball.