The food delivery industry faces a complex battle with labor standards for delivery drivers. It has the potential to also impact customers and businesses. New York City is at the heart of some of these developments. It shapes a broader conversation about gig economy labor practices. 

App-based delivery workers are usually treated as independent contractors. This means general minimum wage laws don’t apply to them. 

The NYC has now passed a rule requiring online food delivery companies to pay a minimum of $17.96 per hour or 50 cents per minute before tips.

Delivery drivers are pleased with this move, hoping it will standardize their labor conditions. However, restaurants are concerned about the potential delays in food deliveries. 

Food delivery companies Uber Eats, DoorDash, and Grubhub tried to push back, but a New York state appeals court dismissed the application. A state judge rejected claims that the law unfairly discriminates against their food delivery service. 

What does it mean for companies?

Companies can decide whether to pay workers hourly or per delivery based on the hours logged on the app. 

Concerns exist that it would force companies to shrink service areas to ensure deliveries don’t take too long. 

DoorDash, Grubhub, and Uber Eats argue that New York City’s new minimum wage law for app food delivery workers would hurt more than help. 

The law has taken inflation into account and will adjust each year. It would raise pay to nearly $20 per hour by April 2025.

A shift in food deliveries

The NYC rule aims to ensure delivery drivers are fairly compensated without feeling forced to break traffic rules to make it to customers on time. 

According to Wear Your Brand’s Stephan Soroka, before, many drivers used multiple apps to make around $20 to $25 per hour. “They often resorted to breaking traffic laws to meet earnings targets. The new law, which pays drivers 49 cents per minute during active delivery time, reduces the need for such risky behavior.”

Commenting on LinkedIn, Vasim Shaikh, a logistics expert in Dubai says there are some concerns. “Interesting take on paying by the minute on active delivery time. Given the varied preparation times across different cuisines, this aspect presents a unique challenge. It’s essential to fine-tune the assignment logic to minimize wait times for delivery associates.”

There is already software assisting with route optimization, like Locate2u, to combat waiting times on the road. 

NOW READ: What is route optimization and how does it work?

About the author

Mia is a multi-award-winning journalist. She has more than 14 years of experience in mainstream media. She's covered many historic moments that happened in Africa and internationally. She has a strong focus on human interest stories, to bring her readers and viewers closer to the topics at hand. Do you have a story you would like her to expose, report on, or consider? Please send your request to Newsdesk@locate2u.com.