A New York state judge on Thursday rejected a bid by Uber Technologies Inc UBER-N, DoorDash Inc DASH-Q and Grubhub Inc to block New York City’s novel law setting a minimum wage for app-based delivery workers.
The decision by New York Acting Supreme Court Justice Nicholas Moyne will allow the law to take effect pending the outcome of the companies’ lawsuit. Moyne in July had stopped the law from being implemented while he considered the companies’ request to block it until the case is resolved.
The law will require companies to pay delivery workers $17.96 an hour, which will rise to nearly $20 in April 2025. Companies can decide whether to pay workers hourly or per delivery, which would be based on the hours workers log into the app.
Uber, DoorDash, Grubhub Inc and a smaller food delivery service, Relay Delivery Inc, claim the law will force them to shrink service areas to absorb the new labor costs, ultimately hitting customers and restaurants.
Moyne blocked the city from enforcing the law against Relay pending the outcome of the case. The judge said that unlike the other companies, Relay cannot immediately raise the fees it charges to restaurants and needs time to renegotiate its contracts.
A DoorDash spokesperson in a statement said the decision was disappointing for workers, merchants and customers.
“The City’s insistence on forging ahead with such an extreme pay rate will reduce opportunity and increase costs for all New Yorkers,” the spokesperson said.
Uber in a statement said the law will put thousands of people out of work and force remaining delivery workers to compete against each other to deliver orders faster.
Grubhub and a lawyer for Relay did not immediately respond to requests for comment. The New York City Department of Consumer and Worker Protection, which is responsible for enforcing the law, did not respond to a request for comment.
Supporters of the city’s law, which is the first of its kind in the United States, say it is needed because delivery workers in the city earn about $11 an hour on average after expenses, far below the city’s $15 minimum wage.
App-based delivery workers are usually treated as independent contractors rather than company employees, so general minimum wage laws do not apply to them.
Uber and the other companies filed separate lawsuits in July, which were consolidated. They say city officials based the minimum wage law based on flawed studies and statistics.
The companies allege the city’s surveys of delivery workers were biased and designed to elicit responses that would justify a minimum wage.
But Moyne on Thursday said the companies overstated the importance of those surveys to the city’s legislative process.
The judge also rejected several other claims, including that the law was invalid because it covers workers who deliver food from restaurants but not from grocery and convenience stores.