New York City has established a new minimum wage for food delivery workers who deliver for platforms like Uber Eats, DoorDash, Grubhub and Relay. It should be a historic win for gig workers, but both delivery workers and companies are unhappy with it.

Many workers, labor rights activists and even the city’s comptroller say the minimum pay – just under $18 per hour – is not nearly enough to cover the costs of living in NYC or the costs of being a delivery driver. App-based gig companies say the ruling will cause unintended consequences for workers, and a spokesperson for DoorDash told TechCrunch that “litigation isn’t off the table.”

Of course, there are those who say that perfect shouldn’t be the enemy of good, and plenty of delivery workers are in support of the ruling. NYC’s delivery workers currently make about $7.09 an hour on average, according to a release from the city, so the new ruling is certainly a step up. But it’s clear that this contentious issue will further divide the two camps.

Companies that use delivery workers will get to choose between one of two minimum pay rate options outlined by the city. The first option requires companies to pay a worker at least $17.96 per hour, excluding tips, for time spent connected to the app, which includes time spent waiting for a gig. This will increase with inflation next year to about $19.96 per hour.

The other option involves apps paying $0.50 per minute of active time, exclusive of trips. Active time happens from the moment a worker accepts a delivery to the moment they drop off the food.

While none of the gig companies specified which method of payment they might follow, industry experts have their money on the $0.50 per active minute option. Paying per active minute is already written into how these companies do business in many locations.

In California, where Proposition 22 is the law of the land, companies are guaranteed to pay at least 120% of the local minimum wage for active miles. If the minimum wage is $14 per hour, a delivery that took 15 minutes door-to-door would earn a worker $4.20.

Too little too late

Many deliveristas – the community of app-based delivery workers – and labor rights activists argue the city is about six months late in ruling on a delivery worker minimum pay rate and that the revised set of rules is a reduction from the initially proposed pay formula. In November, the city had proposed a minimum pay of $24 per hour.

The $18 per hour pay rate will end up looking more like around $13 per hour after expenses, according to a statement from NYC Comptroller Brad Lander.

In September 2021, the Department of Consumer and Worker Protection (DCWP) passed Local Law 115, which set a January 1, 2023 deadline to set a minimum pay rate for deliveristas. In public comments, many gig workers said they should be back paid for the last half a year.

“City Hall acquiesced to the lobbying of multibillion-dollar app companies, delaying the raises owed to deliveristas six months ago and setting a sub-minimum-wage standard that pads corporate profits off the backs of some of the hardest workers in our city,” said Lander in a statement.

Lander went on to say that workers should be paid at least the minimum wage after expenses. Most deliveristas drive a moped or e-bike in NYC and not all own their own vehicles. Services from companies like Joco, Zoomo and Whizz offer daily, weekly and monthly rentals. Joco’s network of docked e-bikes are available for six-hour per day rentals for $65 per week. Whizz and Zoomo provide e-bike subscriptions for $179 per month and $199 per month, respectively.

“There is no doubt that this is a positive step forward, but the pay issue has been researched and studied, and this is simply not enough money for this job,” Veena B. Dubal, professor of law at the University of California College of the Law, San Francisco, told TechCrunch. “This is dangerous work, and the cost of living in NY is quite high. The predictability and raise it will offer workers is welcome, but, again, it’s just not enough.”

The general sentiment among deliveristas who submitted open comments to the proposal mirrors Dubal’s. Many have said they suffered accidents, theft and assaults while on the job, none of which is covered by the companies because workers are still considered independent contractors.

“Now that we are about to achieve the minimum wage, the new challenge will be for these companies to comply with the proposal issued by the city, so it is important to highlight the importance and also the responsibility that we workers have to denounce, report any abuse that these companies may have in this process of change that must now be in favor of us workers,” wrote a worker named Vik. “It is a historic moment that after years of free labor now thousands of people will benefit.”

Working hard or hardly working

Companies, meanwhile, argue that the ruling will have adverse effects on delivery workers. Spokespeople from DoorDash and Grubhub said that having a minimum wage would require the companies to make platform changes that may harm gig workers.

For example, the companies might start reducing platform access for workers who don’t accept every gig or who work part time. Those who remain on the platform will have to work almost twice as hard. A study from the DCWP projects that deliveries will increase from 1.6 to 2.5 per hour.

“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,” said Josh Gold, an Uber spokesperson.

While gating access to the platform for part-time workers is certainly a potential outcome, Sergio Avedian, senior contributor at The Rideshare Guy and self-proclaimed UberEats “cherry picker,” says demand for delivery workers is probably high enough, especially in NYC, for there to remain a mix of full and part-time workers.

“Uber is saying, ‘Now, we’re gonna force these people to run their asses off,’” said Avedian. “Well, they’re doing that anyway in NYC.”

Companies may also have to make platform changes to ensure workers aren’t being paid double time by different apps. Many gig workers do what Avedian calls “dirty apping,” which means swapping between apps to pick up as many gigs as possible. Avedian thinks companies will track workers’ locations more efficiently to be able to catch them picking up orders for other apps on the sly.

“They may put in these restrictions on workers, telling them they must take every order now that I’m paying your minimum wage. No cherry picking,” said Avedian.

Making sure delivery workers stay loyal to each platform will help keep things tidy for app companies, but it also might lead into the slippery slope of employment. Because if a worker can only work for one company and is required to fulfill every order that is sent to them, then it’s much harder for app companies to make the case that workers are still independent contractors.

Avedian also pointed out that the ruling doesn’t include any caveats of delivery workers giving up the right to collective bargaining or unionizing, nor does it imply that workers agree to stay independent contractors.

“In most places where Uber agrees to a rate hike for drivers, the drivers gave up their rights and said, ‘Okay, we’re gonna stay independent, just give us higher rates,’” said Avedian. “All of these gig companies are concerned now and they’re trying to nip it in the bud at the start of something.”