Dive Brief:

• The New York City Department of Consumer and Worker Protection (DCWP) issued a report outlining its planned wage floors for food delivery workers in New York City on Wednesday. 
• The report calls for a $17.87 hourly wage rate for delivery workers beginning Jan. 1, 2023. The target wage level includes a $19.86 base rate, $2.26 hourly compensation for expenses and $1.70 payment to make up for delivery workers’ exclusion from workers’ compensation insurance.
• A set of laws passed last fall empowered the DCWP to set wage floors for gig workers, as part of New York City’s efforts to raise wages and protect workers who lack traditional employment benefits.

Dive Insight:

This delivery wage floor is the first of its kind in the U.S., the DCWP claims in a press release.  The DCWP also alleges the approximately 60,000 app-based restaurant delivery workers in New York City earn an average of $7.09 an hour, excluding tips. DoorDash, however, told Restaurant Dive last year that its Manhattan delivery workers tend to take home $33 an hour including tips.

“This proposed minimum pay rate would help guarantee delivery workers a more dignified pay and rightfully establish pay equity with other workers who earn a minimum wage,” DCWP Commissioner Vilda Vera Mayuga said in the press release . 

The proposed wage rule is still subject to public hearings and the city’s rulemaking process. The DCWP calculated the target pay by setting a base wage rate ($19.86) which is equal to the wage rate set for drivers by the New York City Taxi & Limousine Commission, according to the report. To this base rate, the DCWP added $2.26 an hour, which the department believes is equal to the average hourly expenses incurred by delivery workers using e-bikes. E-bikes have become a ubiquitous means of transport for delivery workers in NYC, according to The Verge, because of their speed and maneuverability relative to cars or unpowered bicycles.

The final component of the pay rate is $1.70, representing workers’ compensation that will need to be provided to delivery workers, according to the press release. 

The proposed wage rule is the result of a study on delivery driver pay mandated by New York’s City Council last fall, which required the DCWP to determine and then promulgate rules governing wage levels by Jan. 1, 2023. The required wage would not go up to $23.82 overnight, but rise in a graduated fashion, starting at $17.87 in Jan. 2023, reaching $20.25 in April 2024 before reaching the level called for by the DCWP in 2025.

The proposed rule also requires apps to pay for time workers spend on-call, or waiting to accept orders. A similar rule passed by the Taxi & Limousine Commission in 2018 faced pushback from the industry and from workers, especially after apps began locking workers out during periods of low-consumer demand. The TLC proposed a change earlier this week to its rules that would allow rideshare apps to not pay drivers for on-call time as long as the utilization rate, meaning the fraction of time drivers are carrying passengers or picking up passengers, did not fall below 52% in a given year. 

Uber Eats warned that requiring companies to pay for on-call time could lead companies to lock drivers out of apps during periods of low demand, restricting the supply of labor. According to the DCWP’s report, DoorDash, Grubhub and Relay Delivery all bar delivery workers during some periods, though Uber Eats does not.

“The day after repealing a rule that was universally hated by TLC drivers, the City is proposing a nearly identical one for delivery workers that would force apps to block couriers from working when and where they want,”  Uber spokesperson Freddi Goldstein wrote in an emailed statement to Restaurant Dive.

DoorDash similarly argued the rule would reduce driver flexibility and drive up prices for consumers, but a spokesperson said the company was willing to work with the city.

“We will continue to work with policymakers on a reasonable approach that better reflects the way Dashers use the platform for flexible earning opportunities,” a DoorDash spokesperson wrote in an email to Restaurant Dive.

The DCWP’s report argued higher pay overall would increase the rate at which delivery workers accept orders, lowering on-call time.