In a recent Insights installment, we discussed the new minimum wage rates for certain delivery workers in New York. Unsurprisingly, related legal developments and delays have arisen.
Today we will provide an update on the status of the new law and its impact on restaurant franchises.
Back In Court: Minimum Wage for Delivery Workers
As previously detailed, July 12, 2023 was supposed to be a significant date for many of the 60,000 food delivery workers in New York City. This date would have marked the first pay period when the City’s minimum wage law was to take effect – allowing an increase in pay for third-party food delivery workers to $17.96 per hour before tips once implemented. This nearly $11 increase, which was announced by NYC Mayor Eric Adams in June, was not well received by the management of many restaurants and franchise locations in New York. Though it is good for the boots on the ground, it is likely that the third-party app companies will seek to pass these new costs on to restaurant owners and franchise operators.
Apparently, the corporate offices of DoorDash and Grubhub were also rattled. So much so, that the delivery service companies filed a lawsuit in New York State Supreme Court alleging that the law hurts businesses as well as the employees that it is intended to help. Uber and Relay have also filed suit.
Earlier this month, Doordash referred to the wage increase as:
“…an extreme earnings standard for food delivery workers, a bad policy that was the result of an even worse process — one that was conducted arbitrarily, relied on dubious methodology, and failed to follow the law that City Council had passed…”– Doordash
What Franchises Need To Know
On July 12th, New York State Supreme Court Judge Nicholas Moyne issued a restraining order temporarily blocking the rule from taking effect, pending additional submissions and hearings on the matter.
Should the Judge find in favor of the workers, it is likely that the rate increase will affect all restaurants including franchises, as the law does not call out any exceptions. In that event, franchisors and franchisees with units in New York City should expect a rate increase from their third-party delivery providers.
Consult a NY franchise lawyer to strategize on any fee changes with service providers.
Contact Lusthaus Law
In addition to the updates listed above, remember that Lusthaus Law’s website is a resource for New York franchisors and franchisees. We have published two downloadable and complimentary e-books and our Insights blog is regularly updated to reflect industry trends and recent achievements in client representation.
Contact us today to learn more about how Lusthaus Law P.C. can help you navigate a clear path for your franchise’s successful future.