Delivery Giants Settle with New York City Over Wage and Fee Cap Disputes

DoorDash, Grubhub, and Uber Eats—have reached a legal settlement with New York City, resolving long-standing lawsuits over laws that raised minimum pay for delivery workers and limited the fees these companies could charge restaurants.

The agreement, filed Wednesday in both federal and state courts in Manhattan, outlines a path forward that includes modifying some of the city’s pandemic-era regulations. According to Reuters, the settlement allows the companies to occasionally charge higher fees than those permitted under the current restrictions, which were put in place in May 2020 to help stabilize the struggling restaurant industry during the COVID-19 crisis.

In a statement released Thursday, a spokesperson for Mayor Eric Adams described the resolution as “a victory for all workers.” The spokesperson also criticized the lawsuits, saying they caused delays that denied millions of dollars in wages to delivery workers. Per Reuters, the city expects the New York City Council to enact the agreed-upon regulatory changes into law.

As part of the deal, DoorDash, Grubhub, and Uber Eats agreed to drop their lawsuits permanently, meaning they cannot be refiled in the future.

The backdrop to the legal battle includes a significant shift in pay for delivery workers. Since April 1, the city’s Minimum Pay Rate has ensured that app-based couriers earn at least $21.44 per hour before tips—up sharply from just $5.39 two years ago. This measure was implemented to support the growing gig workforce, which played a vital role during the pandemic and beyond.

Related: DoorDash, Grubhub, and Uber Eats Settle With NYC Over Cap Fees

Fee caps were another contentious issue. Under existing law, food delivery companies are barred from charging restaurants more than 15% for delivery services and more than 5% for marketing and related services. Initially introduced as a temporary relief measure, the restrictions became permanent in August 2021. According to Reuters, the delivery companies argued that these caps infringed on their constitutional rights and forced them to operate at financial losses in New York City, amounting to hundreds of millions in lost revenue.

A Grubhub spokesperson welcomed the settlement, saying it provides restaurant partners with “greater ability to reach customers while preserving important safeguards for their business.” DoorDash and Uber have not yet issued public statements.

Critics of the city’s original laws had warned that the financial strain on delivery platforms would eventually be passed on to consumers, potentially making restaurant meals more expensive and harming the very industry the laws were designed to protect.

At the time the lawsuits were filed, other cities, including San Francisco, had enacted similar permanent fee caps, indicating a broader nationwide debate over how much regulation should govern the relationship between gig platforms, workers, and small businesses.

Source: Reuters