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New York City Council Passes Sweeping Food Delivery Protections

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(Bloomberg) -- New York City lawmakers passed a set of bills aimed at improving working conditions and pay for app-based workers, becoming one of the first cities in the U.S. to significantly regulate the food delivery industry dominated by DoorDash Inc., Grubhub and Uber Technologies Inc.

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The sweeping measures would require restaurants to grant couriers access to bathrooms, set a minimum per-trip payment and a guarantee that couriers receive full tips, and allow the workers to set limits on their routes. The apps will also be required to pay couriers at least once a week, offer payment options that don’t require a bank account and will be prohibited from charging fees to workers to receive earnings.

The slate of legislation is one of the most comprehensive efforts in the U.S. to regulate the industry after the pandemic-induced boom in food-delivery exposed vulnerabilities for the restaurants and workers that keep the apps running. The dichotomy came into stark focus last month after Hurricane Ida’s torrential storms triggered historic, deadly flooding across New York. Images of delivery workers carrying on through the downpour, and not always receiving better pay, prompted outrage.

“Delivery workers have worked tirelessly throughout this pandemic risking their lives, their livelihoods,” said Councilwoman Carlina Rivera, a prime sponsor of the bills. “They have almost singlehandedly sustained our restaurant industry. We all saw those photos of waist-deep water that they were wading through to bring people their food and medication.”

Read more: New York Delivery Drivers Face Low Pay Even as Risks Mount

In New York City, an estimated 65,000 food delivery drivers were deemed essential workers during the Covid-19 pandemic. These workers, classified as independent contractors, don’t have access to benefits such as minimum wage or overtime, which prompted a push from worker advocates to bolster protections over the last year.

But scrutiny of online platforms has also intensified nationwide. In August, Chicago sued Grubhub, which is owned by Amsterdam-based Just Eat Takeaway.com NV, and DoorDash over “deceptive” fees and listing restaurants on apps without their permission. California lawmakers passed a bill requiring meal delivery companies to disclose to customers third-party fees and commissions and how much restaurants make on their order.

Delivery companies have started to fight back, to defend their business models that rely on contractors. The app-based companies have endorsed offering basic benefits in exchange for the flexibility of remaining contractors, but not the full rights of an employee.

This dynamic played out in California with a $220 million voter initiative, Proposition 22, that gave drivers access to certain benefits such as a health care stipend and a minimum wage floor. The gig companies are backing a similar effort in Massachusetts.

“Many of them, not all, do not treat them with the respect these workers deserve,” Rivera said of the companies, adding that median hourly pay is often less than minimum wage. “This victory goes to all the workers out there.”

Common Sense

DoorDash and Grubhub sued San Francisco, and UberEats joined the other two in a lawsuit against New York after the cities imposed a permanent cap on the commission fees the platforms can charged to restaurants, calling the legislation “unconstitutional, harmful and unnecessary.”

Thursday’s new bills have a measure of support from at least some of the delivery companies, however, including from Grubhub and DoorDash. Uber didn’t respond to a request for comment.

“These bills are common-sense steps to support the delivery workers who work hard every day for New York’s restaurants and residents,” according to a statement from Grant Klinzman, a Grubhub spokesperson. “Ensuring they receive a living wage and have access to restrooms isn’t just a good idea -- it’s the right thing to do.”

Workers said they planned to rally outside of City Hall on Thursday in support of the bills, similar to other protests held this year led by a grassroots advocacy group Los Deliveristas, which have advocated for better working conditions for app-based delivery drivers.

“We recognize the unique challenges facing delivery workers in New York City and share the goal of identifying policies that will help Dashers and workers like them,” said DoorDash spokesperson Campbell Millum. “We will continue to work with all stakeholders, including the City Council, to identify ways to support all delivery workers in New York City without unintended consequences.”

The Covid-19 pandemic pushed many unemployed New Yorkers to turn to app-based delivery services, which surged in popularity as restaurants closed throughout the city. A study from Cornell University said that 75% of delivery workers joined the industry because they lost work during the pandemic.

After accounting for expenses, the median hourly wage for delivery workers in New York City is $7.94, excluding tips, according to the report conducted by the Worker’s Justice Project in partnership with Cornell’s School of Industrial and Labor Relations. The minimum wage in New York is $15 an hour for employees. Data from the study also show that 65% of the delivery workers surveyed were denied access to a restaurant bathroom.

“We feel we’re on solid legal ground,” said Council Speaker Corey Johnson. “It wouldn’t surprise me if some of the large, multi-billion dollar corporations that were making a lot of money in New York City tried to stop this, but in the face of that my hope is that other cities will take action and join New York City in enacting protections for delivery workers.”

The grassroots efforts to fight for basic protections for gig workers could be replicated in other locales, said Erin Hatton, a sociology professor at the University of Buffalo, who studies labor movements. She said New York City was further along than others, and the push for basic rights that practically helped workers was a good thing to replicate, but the fight exposes broader issues with misclassification.

“Localities have to fight for very modest protections,” Hatton said. “But this type of effort is responding to the gig sector and their particular needs, which basic employment doesn’t cover. Labor and employment law needs to be updated to respond to the 21st century. I have misgivings about workers having to organize again and again to get the most basic needs met, like going to the bathroom on the job.”

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