App giants are trying to block NYC rules on minimum pay

During this summer of heat, smoke, and flash flooding, food delivery workers have been braving the streets to bring New Yorkers our food. Biblical weather isn’t delivery workers’ only challenge, though: their pay in New York City averages around $7 per hour without tips, and there’s a high rate of workplace fatalities, after which survivors generally get little or no help from the apps.

It was welcome news, then, that New York City in June set a rule establishing a pay floor for delivery workers of $17.96 per hour, a rate that would land workers around minimum wage, accounting for expenses, unpaid wait time, and other factors. This rule was passed pursuant to a hard-fought law sought by a worker group, Los Deliveristas Unidos.

Several corporations, including Uber, DoorDash, and GrubHub, swiftly filed lawsuits to stop the July 12 effective date. These apps, it should be noted, don’t follow workplace laws like every other employer; they treat their workers as independent businesses and not as employees (they’ve been sued for this by the attorneys general of California and Massachusetts). The apps should have counted themselves lucky that they were expected only to pay a better wage.

Instead, the corporations’ court filings raise countless objections to the city’s analysis in setting the pay rate. (My favorite: the apps will suffer “reputational harm” because of the rule, as though it’s reputationally helpful to underpay a highly visible workforce that New Yorkers can literally see hustling in our neighborhoods.) A court hearing is scheduled for July 31.

The apps have an uphill battle. They must show that the city was “arbitrary and capricious” in passing the rule. “Arbitrary and capricious” doesn’t mean the city has to be perfect. If the judge concludes that he personally would have set a different rate, but the city was reasonable and evidence-based, that’s not arbitrary and capricious.

In fact, the city was careful and deliberate in this process. City staffers reviewed extensive company-supplied data about worker deliveries, hours, log-ins, and pay; they also conducted a large-scale worker survey, reaching out in nine languages to more than 122,000 recipients, of whom nearly 8,000 replied, which is “several times the rate obtained by leading academic researchers conducting online surveys concerning low wage work.”

In addition, the city partnered with a leading transportation engineering firm, worker advocacy groups, and the Columbia University Labor Lab to do a field survey of workers, and with trade associations to survey restaurants. There were public hearings, along with thousands of written and oral testimonies from workers, the apps, and advocates. City economists analyzed the rule’s potential impact on everyone involved, assessed industry trends, and proposed several methods for apps to accommodate the change.

This process was not a pro forma exercise: the final rule set a significantly lower pay rate than an earlier proposal, in response to company concerns; the rule also requires an implementation report in 2024 to identify any needed policy adjustments. Arbitrary and capricious? Hardly.

Even if companies succeed in court, though, this issue won’t go away: the city would start a new rulemaking process, likely landing on a wage in the same ballpark, since the goal is decent pay that’s near the minimum wage.

Why, then, are apps suing to stop the rule, if a fair pay standard is inevitable? The longer this is delayed, the less money goes to workers and more stays with the apps. The city has estimated that 60,000 workers will collectively lose $15 million each week that the rule’s implementation is delayed.

More broadly, the delay is another example of ongoing resistance by gig corporations to laws imposed on them, whether fingerprint background checks in Austin or New York City’s 2019 creation of a minimum wage for app drivers. City officials could have proposed a pay standard calculated with the genius of Albert Einstein or the tomfoolery of Krusty the Clown. Either way, it seems highly probable that some or all of the apps would have sued.

But delivery workers will get a minimum wage. The City Council — the elected representatives of the public — passed a law requiring it, and city staffers will get this done. In the meantime, apps are paying lawyers to fight, instead of paying their workers enough to live.

If gig corporations sincerely want to avoid reputational harm, they could start by valuing their workforce, instead of filing a long-shot lawsuit to keep paying them poorly.

Gerstein directs the State and Local Enforcement Project at the Harvard Center for Labor and a Just Economy, and she is a senior fellow at the Economic Policy Institute. She previously served as labor bureau chief in the New York state attorney general’s office.