Judge Blocks Massive Minimum Wage Increase

Photo by Tingey Injury Law Firm on Unsplash

On Friday (July 7), a judge in New York State put a hold on a rule in New York City that mandated food delivery companies to pay their drivers a minimum wage of almost $18 per hour.

Judge Nicholas Moyne of the New York State Supreme Court issued a preliminary injunction that paused the minimum wage rule from going into effect in the coming week. Moyne’s ruling came after Grubhub and DoorDash jointly filed a lawsuit opposing the new minimum wage rule and the rule, and Uber filed a separate Lawsuit on Thursday (July 6).

Moyne gave July 31 as the hearing date for arguments to be made to determine whether the injunction should remain in place while the legal challenges play out.

The city’s Department of Consumer and Worker Protection set a rule requiring workers for food delivery apps like Uber Eats and DoorDash to earn at least $17.96 per hour, nearly an $11 increase from the average $7.09 per hour wage these workers currently make.

Officials touted the policy as the first of its kind anywhere in the United States.

The increase would continue by $1 annually, reaching $18.96 hourly in April 2024 and $19.96 hourly in April 2025.

When announcing the minimum wage requirements, New York City’s Democratic Mayor Eric Adams declared that the new rule would give delivery drivers the support they deserve.

However, food delivery companies criticize the plan as being “drastic” and “unrealistic.”

In their joint filing, Grubhub and DoorDash argued the minimum wage rule would have “drastic” and “immediate” repercussions for every party involved in the transaction and would result in a $5 or more increase to food orders for every New York City customer. The two companies suggested that such an increase would reduce service demand and harm their finances and reputations.

In its separate complaint, Uber put estimates at $6 or more per order besides inflation-related increases, and forecasted orders would decline by 20 percent.

Uber suggested the department had developed the rule based on “flawed” data and “biased” surveys and had “unrealistic expectations.”

Instead, the company asserted that it was more important that the policy was correctly developed rather than to have it implemented as quickly as possible.