Food Courier Relay Argues NYC Delivery Pay Rule Will Put It Out of Business

Aug 3, 2023 Teresa Xie, Bloomberg News (Bloomberg) -- A small courier service for restaurants told a judge it could be put out of business by a New York City rule setting minimum pay levels for food

Aug 3, 2023

Teresa Xie, Bloomberg News

(Bloomberg) -- A small courier service for restaurants told a judge it could be put out of business by a New York City rule setting minimum pay levels for food delivery workers who get gigs through mobile apps.

The company, Relay, told a New York court that it is a third-party courier, and not a delivery service like its rivals Uber Technologies Inc., DoorDash Inc. and Grubhub Inc., which also oppose the new rule. Unlike delivery services, Relay is a business-to-business company that doesn’t take orders from customers, Adam Cohen, Relay’s lawyer said.

While the city expects that the big delivery apps would offset the cost of a higher minimum wage by charging consumers more, Relay said that because it doesn’t work directly with customers, it would be forced to raise prices for restaurants, which would be unable to absorb the additional costs.

All of the delivery companies are seeking a preliminary injunction that would block the new rule. The law, which was set to go into effect last month, requires app companies to offer food couriers a flat hourly rate of $17.96, or, alternatively, pay per delivery at about 50 cents a minute.

On average, Relay says its couriers make $30.00 an hour, with a base rate of $12.50.

Cohen said it would be “irrational” for a new law to put a company out of business whose couriers are earning good wages. He disagreed with the state’s legal analysis that treats delivery and courier services the same.

The city said that the compensation rule already factors in Relay’s unique business model.

“Do I have the legal power only to enjoin the law against Relay?” New York State Supreme Court Justice Nicholas Moyne asked in response.

In July, Uber, DoorDash and Grubhub sued the city, arguing the rule will force apps not only to shrink their delivery areas around restaurants, but also raise fees.

The rule was originally passed on June 12, and follows a set of bills enacted in September 2021 by the city to grant sweeping protections to food couriers. On July 7, Moyne temporarily halted the measure pending further arguments.

The suit was the latest round of litigation by the companies against New York City, which includes efforts to block a cap on commissions they could collect from restaurants and a fight over a mandate they share customer data with eateries. Both challenges are ongoing.

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