Preview
FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023
NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023
New York City Department of Consumer and Worker Protection
Notice of Public Hearing and Opportunity to Comment on Proposed Rules
What are we proposing? The Department of Consumer and Worker Protection (“DCWP” or “Department”) is proposing
to add rules establishing methods for determining the minimum payments that must be made to a food delivery worker by
a third-party food delivery service or third-party courier service, as required by New York City Administrative Code § 20-
1522.
When and where is the hearing? DCWP will hold a public hearing on the proposed rule. The public hearing will take
place at 11:00am on April 7. The public hearing will be accessible by phone and videoconference.
To participate in the public hearing via phone, please dial 646-893-7101
o Meeting ID: 273 020 226 537
o Passcode: R3sJ2u
To participate in the public hearing via videoconference, please follow the online link:
https://tinyurl.com/nhcp5t8d
o Meeting ID: 273 020 226 537
o Passcode: R3sJ2u
How do I comment on the proposed rules? Anyone can comment on the proposed rules by:
Website. You can submit comments to DCWP through the NYC rules website at http://rules.cityofnewyork.us.
Email. You can email comments to Rulecomments@dcwp.nyc.gov.
By speaking at the hearing. Anyone who wants to comment on the proposed rule at the public hearing must sign
up to speak. You can sign up before the hearing by calling (212) 436-0396. You can also sign up on the phone or
videoconference before the hearing begins at 11:00am on Friday, April 7. You can speak for up to three minutes.
Is there a deadline to submit comments? Yes. You must submit any comments to the proposed rule on or before Friday,
April 7.
What if I need assistance to participate in the hearing? You must tell DCWP’s External Affairs division if you need a
reasonable accommodation of a disability at the hearing. You must tell us if you need a sign language interpreter. You may
tell us by telephone at (212) 436-0210 or by email at Rulecomments@dcwp.nyc.gov. Advance notice is requested to allow
sufficient time to arrange the accommodation. Please tell us by Friday, March 31.
Can I review the comments made on the proposed rules? You can review the comments made online on the proposed
rules by going to the website at http://rules.cityofnewyork.us/. A few days after the hearing, all comments received by
DCWP on the proposed rule will be made available to the public online at http://www1.nyc.gov/site/dca/about/public-
hearings-comments.page.
What authorizes DCWP to make this rule? Sections 1043 and 2203(f) of the New York City Charter and Sections 20-
1506(a), 20-1507(c), and 20-1522(a)(3) and (d) of the New York City Administrative Code authorize the Department of
Consumer and Worker Protection to make these proposed rules. The proposed rule was included in the agency’s regulatory
agenda.
Where can I find DCWP’s rules? The Department’s rules are in Title 6 of the Rules of the City of New York.
1
FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023
NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023
What laws govern the rulemaking process? DCWP must meet the requirements of Section 1043 of the City Charter when
creating or changing rules. This notice is made according to the requirements of Section 1043 of the City Charter.
2
FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023
NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023
Statement of Basis and Purpose of Proposed Rule
The Department of Consumer and Worker Protection (“DCWP” or “Department”) proposes these rules to implement
Local Law 115 of 2021, which required DCWP to study the pay and working conditions of food delivery workers and,
based on the results of its study, to establish a method for determining the minimum payments that third-party food
delivery services and third-party courier services (together, “apps”) must pay to food delivery workers. See NYC Admin.
Code § 20-1501 (defining “food delivery worker,” “third-party food delivery service,” and “third-party courier service”).
Background. Prior to the passage of Local Law 115 of 2021, there were no minimum earnings protections for food
delivery workers who work for apps as independent contractors. The legislative record indicated that these workers faced
low pay and high expenses. Local Law 115 of 2021 charged DCWP with studying this workforce and developing an
appropriate minimum pay rate to ensure adequate compensation for these workers.
First Proposed Rule. To implement Local Law 115 of 2021, DCWP published a proposed rule in the City Record on
November 16, 2022 (“First Proposed Rule”). The First Proposed Rule made the following amendments to Subchapter H,
of Chapter 7 of Title 6 of the Rules of the City of New York:
Section 7-801 added definitions of “on-call time”, “pay period”, and “trip time”;
Section 7-805 added recordkeeping and reporting obligations for a third-party food delivery service or third-party
courier service;
Section 7-806 clarified what constitutes “required” travel across a bridge or through a tunnel;
Section 7-807 established that compensation must be calculated for each pay period; and
Section 7-810 set minimum pay rates, the time periods for which such pay rates apply, and the inflation
adjustments required for such pay rates.
Concurrently with the publication of the First Proposed Rule, DCWP published a report titled A Minimum Pay Rate for
App-Based Restaurant Delivery Workers in NYC (“Report”). Sections 1 through 4 of the Report discussed the
Department’s sources, methods, and findings concerning the delivery industry and the working conditions of food
delivery workers. (Report at 1-26.) Section 5 of the Report described the First Proposed Rule. (Report at 27-33.) Section 6
of the Report modeled the impacts of the First Proposed Rule on food delivery workers, apps, restaurants, and consumers.
(Report at 34-36.)
The First Proposed Rule was the subject of a public hearing held on December 16, 2022. The Department received
comments on the First Proposed Rule from food delivery workers, third-party food delivery services (Uber Eats,
GrubHub, and DoorDash), a third-party courier service (Relay), worker advocates, transportation safety advocates,
restaurants, researchers, elected officials, and members of the public, among others.
Second Proposed Rule. The Department made certain changes after consideration of comments received in response to
the First Proposed Rule and is now proposing these revised proposed rules (“Second Proposed Rule”). Specifically, the
Department is making the following changes from the First Proposed Rule:
Section 7-801 retains the definitions of “on-call time,” “pay period,” and “trip time” from the First Proposed Rule
and adds definitions of “cancellation,” “cancelled,” “internal identifier,” and “utilization rate.”
Section 7-805 retains most recordkeeping and reporting obligations for a third-party food delivery service or
third-party courier service from the First Proposed Rule, but narrows the scope of apps’ reporting obligations and
adds to apps’ recordkeeping requirement an obligation to maintain a food delivery worker’s taxpayer
identification number and certain information about a food delivery worker’s phone.
Section 7-806 retains the clarification of what constitutes “required” travel across a bridge or through a tunnel;
from the First Proposed Rule and adjusts apps’ disclosure requirements to reflect changes to the minimum pay
rate.
Section 7-810: retains the inflation adjustment methodology from the First Proposed Rule, adjusts the minimum
pay rate to reflect “multi-apping” and to incorporate the latest inflation data; renames the minimum pay method
3
FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023
NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023
set forth in the First Proposed Rule “the standard method;” adds an alternative method for determining minimum
pay; adjusts the effective date of implementation; and adjusts the phase-in schedule for the minimum pay rate.
The Second Proposed Rule also corrects minor typographical errors in the First Proposed Rule and makes
technical corrections to clarify certain text.
The “Standard Method” to Meet the Minimum Payment Requirement
The Second Proposed Rule retains the individual pay and aggregate pay requirements set forth in the First Proposed Rule
for apps to determine the minimum payments they must make to food delivery workers each week. In the Second
Proposed Rule these two requirements are referred to as the “standard method.” Under the standard method, an app’s
payment to each delivery worker, individually, would have to meet or exceed the minimum pay rate multiplied by the sum
of each individual worker’s own trip time during the week; and the app’s total payments to all its delivery workers,
together, would have to meet or exceed the minimum pay rate multiplied by the sum of all workers’ total trip time and on-
call time during the week.
The “Alternative Method” to Meet the Minimum Payment Requirement
After consideration of relevant comments, the Department has added an alternative option to the standard method. Under
the alternative method, an app must pay each food delivery worker individually for trip time at no less than the alternative
minimum pay rate. The alternative minimum pay rate is calculated by dividing the minimum pay rate by 60%. Under this
method, food delivery workers have a right to higher pay for their trip time, but no additional right to compensation for
their on-call time. The 60% figure reflects the proportion of time food delivery workers spend engaged in trips, known as
the “utilization rate.” An app may choose the alternative method or the standard method, provided that after April 1, 2024,
an app may only choose the alternative method if its food delivery workers, in aggregate, have a utilization rate of at least
53% (i.e., they spend at least 53% of their trip time and on-call time engaged in trips).
Table 1 summarizes the calculations the Department performed to develop the minimum pay rate under the First Proposed
Rule and Second Proposed Rule.
Table 1. Minimum Pay Rate Calculations Under the First Proposed Rule and Second Proposed Rule ($)
First Proposed Second Proposed
Base Pay
Rule Rule
Pay for Wages and Time Off 18.34 18.12
Base Pay Subtotal, less Adjustment for Medicare and Social Security
Contributions
Adjustment for Medicare and Social Security Contributions 1.52 1.50
Base Pay Subtotal x employer share of Medicare and Social Security
contributions (7.65%)
Base Pay Subtotal 19.86 19.62
Workers’ Compensation
Workers’ Compensation if App Delivery Workers were Employees 1.44 1.42
Pay for Wages and Time Off x expected costs (7.84%)
Adjustment for Medicare and Social Security Contributions 0.26 0.26
Workers’ Compensation Subtotal, less the employer and employee shares
of Medicare and Social Security contributions (15.3%)
4
FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023
NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023
Workers’ Compensation Subtotal 1.70 1.68
Pay such that after adjustment for Medicare and Social Security
contributions (15.3%), app delivery workers receive the same value as the
coverage they would receive if they were employees
Expense Component
Average Hourly Expenses of E-Bike Workers 2.26 2.26
See Report at 18-20, 30-31
Total
Subtotal 23.82 23.56
Sum of Base Pay Subtotal, Workers’ Compensation Subtotal, and Average
Hourly Expenses of E-Bike Workers
Adjustment for Multi-Apping 0.00 -3.60
Component Subtotal x multi-apping adjustment factor (1 - 0.8471) (applies
to Second Proposed Rule only)
Adjusted Total 23.82 19.96
Sum of Subtotal and Adjustment for Multi-Apping
Notes: Adapted from Report at 31.
Table 2 summarizes the phase-in schedule under the First Proposed Rule and Second Proposed Rule.
Table 2. Minimum Pay Rate Under the First Proposed Rule and Second Proposed Rule, 2023-2025 ($)
First Proposed Rule Second Proposed Rule
2023 17.87 17.96
April 1, 2024 20.25 18.96
April 1, 2025 23.82 19.96
Notes: All values shown are prior to inflation adjustment. In the First Proposed Rule, the 2023 rate was scheduled to take
effect January 1, 2023. In the Second Proposed Rule, the 2023 rate takes effect 30 days after adoption.
The following sections discuss key components of the Second Proposed Rule and summarize the Department’s
deliberations on comments received from the public on these components.
Base Pay Component
The Department made minor changes to the base pay component of the minimum pay rate in the Second Proposed Rule.
The base pay component of the rate in the Second Proposed Rule is $19.62, a reduction of $0.24 from the original
proposed $19.86.
The basis for the base pay component of the rate is similar in the First Proposed Rule and the Second Proposed Rule. For
both the First Proposed Rule and Second Proposed Rule, the Department derived the base pay component of the rate from
the New York City Taxi and Limousine Commission’s (TLC) minimum per-minute payment rate for high-volume for-hire
vehicle service drivers (“high-volume drivers”), which TLC developed as the independent contractor equivalent of the
5
FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023
NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023
2019 minimum wage. (Report at 21.) When first implemented, this rate was $17.22 per hour. (Id.) TLC has updated the
$17.22 rate for inflation several times since. (Id.) In proposed rules published on September 6, 2022, TLC proposed an
inflation-adjusted rate of $19.86 per hour, which reflected inflation data through June 2022. (Id.; Proposed 35 RCNY §
59D-22(a)(2) and (b)(1).) For parity, the Department also used $19.86 as the base pay component in its First Proposed
Rule. (Report at 29.) Since then, TLC has implemented a $19.62 per hour rate for “high-volume drivers,” reflecting the
December price level. For parity, the Department is also using $19.62 as the base pay component in its Second Proposed
Rule.
Comments:
Several commenters, including members of the public, elected officials, worker advocacy groups, bicycle safety
advocates, and food delivery workers, expressed support for the base pay component, noting that as independent
contractors these workers do not receive a minimum wage or other employee benefits. Many workers described low pay
they currently earn working for apps and their need for a higher wage to survive in New York City and support their
families. Several described the impacts of recent inflation on their ability to earn a living working for apps.
DoorDash, Uber Eats, Grubhub, and tech industry advocates commented that the base pay component of the rate should
factor in workers’ tip earnings or should be based on the hourly pay of tipped workers. Uber Eats contended that to the
extent an earnings standard is based on the minimum wage equivalent, it should not be adjusted for inflation and should
instead be adjusted based on future increases in the minimum wage. Uber Eats also contended that delivery workers
should be paid less than high-volume drivers, citing differences between the two occupations, including differences
between transporting people and food, licensure requirements, expenses, and skillsets.
Conversely, workers, worker advocates, and industry researchers commented that tips are unreliable, and customers may
decrease tips or not tip at all due to factors outside workers’ control. Some worker comments described situations in
which customers revoked promised tips after receiving a delivery, leaving the worker with very low compensation for the
trip.
Uber Eats, DoorDash, Grubhub, and tech industry advocates commented that the base pay rate should take into
consideration the flexibility of food delivery workers’ work arrangement and would appropriately be lower than the
minimum wage applicable to employees. Some workers, while expressing a desire for higher pay, also described why they
value the flexibility of gig work for apps. Conversely, industry researchers and other workers commented that the
minimum pay rate should be increased to account for the unique stresses for food delivery workers who are managed by
algorithms, including unpredictable availability of work, changing compensation levels, and management decisions based
on customer ratings, acceptance rates, and delivery speeds.
Response:
The Department is not incorporating the recommendation to base the rate on the hourly pay of tipped workers for reasons
set forth in the Report, which are summarized here. (Report at 29-30.) First, Section 20-1522(b) of the Minimum Pay Law
states that “any minimum payment rate determined by the department pursuant to this section shall not include gratuities.”
Using a tip credit rate as a base rate would conflict with the letter and spirit of that legal requirement. (Id.) Second, under
New York State law, the tip credit is a special permission afforded to a subset of restaurants, not a general exception for
delivery as an occupation. (Id.) Currently, the tip credit under New York State law does not apply to delivery workers
employed by fast food restaurants or to delivery services in the convenience and grocery sectors that use an employee
model and would not apply if the restaurant apps were to classify their workers as employees. (Id.) Finally, tips are an
unreliable form of income and apps may respond to these rules by reducing or removing tipping features on their
platforms. (Report at 23, 36.)
The Department is not incorporating the recommendation to index the minimum pay rate to future changes in the New
York State minimum wage. The base pay rate builds on the City’s existing determination of appropriate compensation for
low-wage independent contractors and sets a clear and consistent standard for independent contractors working for apps in
6
FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023
NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023
related industries. Further, the real value of the New York State minimum wage of $15 has declined significantly due to
inflation since it went into effect in December 2018, and it is not possible to predict when or whether the State Legislature
will increase it. If the New York State minimum wage were to increase such that the food delivery worker minimum pay
rate would no longer approximate the total compensation app-based restaurant delivery workers would receive if
classified as employees, the Department can revisit the minimum pay rate in future rulemaking at that time.
The Department is not incorporating the recommendation to set a lower rate due to the flexibility of app-based delivery
work and is also not incorporating the recommendation to set a higher rate due to the unique stresses delivery workers
face. As comments from apps, workers, and industry researchers demonstrate, app delivery can have unique benefits and
challenges, from flexibility to instability. Each worker may subjectively value these characteristics of the work differently.
Lastly, the Department is not incorporating Uber Eats’ recommendation to set a base pay component that differs from the
per-minute rate guaranteed to high-volume drivers. The differences Uber Eats noted in expenses between the two
workforces is not relevant to this base pay component of the rate; such differences are reflected in the expense component
of the rates applicable to each workforce. The Department determined that the other differences Uber Eats cited do not
support setting a different base pay rate between food delivery workers and high-volume drivers. There are close
similarities between the two workforces, in that both are independent contractors performing on-demand piece work on
mobile applications involving the transport of goods or persons short distances within New York City, and both receive
customer tips. Further, as set forth in the Report, the TLC’s per-minute rate reflects a determination about the minimum
amount that should be paid for an hour of a worker’s labor, regardless of occupation; differences in Medicare and Social
Security contribution requirements between independent contractors and employees; and average levels of paid leave
received by workers in a U.S. Bureau of Labor Statistics occupational category that includes both app delivery workers
and high-volume drivers (production, transportation, and material moving employees). (Report at 29.) None of these
factors distinguish delivery workers from high-volume drivers.
Workers’ Compensation Component
The Department made no changes to its method for calculating the workers’ compensation component of the rate in the
Second Proposed Rule. However, in both the First Proposed Rule and Second Proposed Rule the Department calculates
the workers’ compensation component as a function of the base rate. (see Table 1.) As a result, the change in the base pay
component from $19.86 in the First Proposed Rule to $19.62 in the Second Proposed Rule produces a $0.02 reduction to
the workers’ compensation component from $1.70 to $1.68.
The purpose of the workers’ compensation component is to compensate for expected income loss and medical expenses
associated with on-the-job injuries that food delivery workers experience. (Report at 30.) Although food delivery workers
experience high rates of injury on the job, they do not have access to traditional workers’ compensation, as workers
classified as employees in New York State do. Unlike high-volume drivers, who have the Black Car Fund, food delivery
workers also do not have access to an alternative system for medical care and wage replacement for on-the-job injuries.
(Id.) DCWP calculated the workers’ compensation component of $1.68 to provide for comparability to the actuarial value
of the workers’ compensation coverage received by employed restaurant delivery workers in New York State (7.84% of
payroll). The workers’ compensation component also includes an adjustment to reflect differences in how federal
Medicare and Social Security contributions apply to independent contractor income and employee benefits (i.e.,
independent contractors pay 15.3% in contributions to Medicare and Social Security on their income, while an employee
does not make any contributions to Medicare and Social Security on the value of benefits like workers’ compensation).
This ensures that app delivery workers receive the same value, despite a less advantageous tax treatment. (Id.) The
components of this adjustment are detailed in Table 1, above.
Comments:
Comments from Uber Eats, DoorDash, tech industry advocates, and business advocates stated that the minimum pay rate
should not include a workers’ compensation component. These commenters contended that it was unlikely workers would
purchase workers’ compensation coverage and recommended that the Department consider alternatives, such as
7
FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023
NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023
exempting apps that provide occupational accident insurance, requiring apps to offer occupational accident insurance, or
working with New York State to establish a compensation fund for delivery workers, similar to the Black Car Fund that
exists for rideshare drivers. DoorDash stated that it offers an occupational accident policy that covers medical expenses
and disability payments for some occupational injuries and may stop doing so if it is required to pay the workers’
compensation component.
Other commenters, including elected officials and food delivery workers, stated that the workers’ compensation
component of $1.68 should be higher, because $1.68 is inadequate to compensate workers for the frequent workplace
injuries they experience and the attendant out-of-pocket medical costs. Comments from food delivery workers and their
family members described the dangers of delivery work, such as traffic accidents, robberies, assaults, and severe weather
conditions. Some described suffering injuries on-the-job and incurring medical expenses and lost work time for which
they received no compensation due to the lack of workers’ compensation coverage and stated that apps’ insurance
coverage was burdensome or impossible to access.
Response:
After considering these comments, the Department determined that retaining the workers’ compensation component is
necessary to compensate workers for lost income and out-of-pocket medical expenses associated with job-related injuries.
Food delivery workers’ rates of injury and work-loss time are high. (Report at 24-26.) Workers report substantial out-of-
pocket medical expenses associated with work related injuries that are not reimbursed by the apps. (Report at 26.)
Comments show that three of the four largest apps offer no occupational injury or accident coverage. The occupational
injury policy offered by DoorDash does not provide coverage for injuries sustained during on-call time; such injuries can
and do occur before a worker accepts a trip or after dropping off a delivery. Its policy also contains coverage exclusions
that make benefits difficult or impossible for injured workers to access, and includes coverage terms that are less generous
than the requirements of the New York State workers’ compensation system.
The purpose of the workers’ compensation component is not to enable workers to purchase their own insurance, as some
commenters asserted. Rather, the purpose is to compensate food delivery workers for their exclusion from the workers’
compensation benefits available to most workers. Were food delivery workers to gain a legal right to a benefit equivalent
to the workers’ compensation coverage currently available to employees, the Department may choose to revisit the
workers’ compensation component at that time. The existing occupational injury coverage offered by DoorDash is
inadequate to warrant exemption from the workers’ compensation component. However, in a future rulemaking the
Department may consider providing for an exemption for policies that meet minimum coverage and accessibility criteria.
In response to comments that $1.68 is inadequate, the Department acknowledges that its approach only partially
compensates workers for injuries. The workers’ compensation benefit provided to employees in New York State also does
not fully replace workers’ lost income or compensate for pain and suffering. Because the Department derived the workers’
compensation component to provide for equivalence with the benefits provided to employees, the minimum pay rate
component also reflects these limitations. It is also possible that given food delivery workers’ exceptionally poor safety
conditions (Report at 25), they may be at higher risk than the population of insured employees from which the Department
derived the workers’ compensation component. However, the detailed data necessary to perform an actuarial analysis of
food delivery workers’ work-related injury and illness costs does not exist. For this reason, the Department chose to base
the component on the claims experience of the closest-comparable insured population within the New York State
workers’ compensation system, despite this limitation. See Report at 22 (referring to employed delivery workers, who
belong to rate class 7380, which includes commercial drivers, chauffeurs, and their helpers).
Expense Component
The Department made no changes to the $2.26 expense component of the rate in the Second Proposed Rule. The purpose
of the expense component is to compensate food delivery workers for necessary expenses they incur to perform delivery
work. (Report at 18-20; 30-31). The expense component of $2.26 is DCWP’s estimate of average hourly expenses for
8
FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023
NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023
workers who perform deliveries using an electric bicycle (“e-bike”), less the cost of traffic or parking tickets, which are
not deductible under IRS rules.
Comments:
DoorDash, Uber Eats, their experts, and some tech industry advocates commented that the expense component of the rate
is too high, arguing that the Department relied on a biased survey, did not account for use of equipment and services
outside of delivery for restaurant apps, and did not account for tax deductibility of expenses. Some of these commenters
proposed alternatives for the expense component of the minimum pay rate.
Several other commenters, including members of the public, elected officials, worker advocacy groups, bicycle safety
advocates, and food delivery workers, commented that the $2.26 expense component of the rate is too low, and
recommended increasing it by $5.00 to $7.26 per hour. These commenters expressed concern that DCWP may not have
adequately considered workers’ expenses for items such as GPS trackers, monthly subscriptions for GPS services, battery
replacements, mopeds, gas, weather-proof clothing, safety gear, incidents of theft, insurance, registration, or anti-theft
alarm devices.
Response:
After considering apps’ and workers’ comments and proposed alternatives, DCWP determined that $2.26 is appropriate
for the expense component of the rate.
First, DCWP’s expense measurement is methodologically sound. As part of its expense measurement, DCWP fielded a
survey of all workers who accepted an offer to perform a delivery in NYC between October 1 and December 31, 2021 for
Uber Eats, Grubhub, DoorDash, Relay, Chowbus, or HungryPanda, except a small number of workers whose contact
information was missing or suppressed. (Report at 2.) In its fielding and analysis of this survey, the Department used
appropriate controls to authenticate responses, exclude submissions from inattentive or unreliable respondents, and
address possible non-response bias. (Report at 2-5.) The 8,000 responses the Department used from the survey represent a
response rate of 6.5%, which is several times the rate obtained by leading academic researchers conducting surveys of
low-wage work. (Report at 3.) The Department then validated these survey responses against matched administrative
records from the apps. In consideration of the foregoing, the Department reviewed the methodological critiques provided
in comments but was not persuaded that the survey is inappropriate for its applications within the Department’s expense
calculations. Specifically, the Department used the survey to measure the frequency with which workers experience loss
or theft of their e-bike, purchase replacement batteries or e-bike accessories, and buy and trade-in phones. The Department
separately gathered market prices for relevant equipment from retailers and other independent sources, including for the
specific makes and models of the phones workers reported buying and selling, and did not use workers’ recollections of
the dollar amounts they spent on any item. (Report at 5.) Further, the Department’s methods for estimating e-bike
depreciation, maintenance, and data plan costs did not draw on survey responses at all. To confirm that the Department’s
estimates of e-bike-related expenses is not overstated, the Department, in a supplemental analysis, found that e-bike
rentals and sales in promotions marketed by Uber Eats and DoorDash are significantly more expensive than the costs
reflected in the expense component of the minimum pay rate. Additionally, the Second Proposed Rule amends apps’
recordkeeping requirements to include certain information about the phones food delivery workers use. This information
will enable the Department to efficiently measure phone expenses without reliance on a survey should it choose to re-
estimate expenses for use in future rulemaking.
Second, DCWP’s method appropriately reflects the tax deductibility of expenses. The minimum pay method is designed
such that a worker who deducts expenses from taxable income will be taxed on their earnings net of expenses.
9
FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023
NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023
Third, DCWP’s methodology for accounting for the use of equipment and services outside of app delivery is sound. With
respect to phone expenses, the Department assumes that workers’ data plans, as well as all phones workers report
purchasing for work with apps, are also used for personal use at typical levels, and allocates cost proportionate to use.
Under this method, the expense component of the rate reflects only 37% of total phone costs. (Report at 19.) This is
consistent with IRS principles. With respect to e-bikes and e-bike accessories, the Department attributes the entire cost to
app delivery. Seventy percent of e-bike workers report app delivery as their only job, and another 7% as their main job.
(Report at 15.) This sets a low upper limit on the amount of use such equipment could be put towards other purposes.
Further, DCWP determined that e-bike and e-bike accessory costs should be fully covered by the minimum pay rate, and
that the economies of scope some workers achieve by applying their equipment to additional uses should accrue to their
benefit.
Fourth, the Department is not incorporating the recommendation to increase the expense component of the rate by $5.00,
as some commenters recommended. DCWP considered all appropriate expenses for the equipment, services, and
accessories necessary to perform delivery on e-bikes, which is the most common and economical means of making most
deliveries. (Report at 2-5; 18-20; 30-31.) However, the Department recognizes that some workers, such as car drivers,
have higher expenses.
Lastly, the Department notes that costs may change over time in ways that are difficult to predict in advance. For instance,
workers may respond to higher pay by purchasing different equipment. Average hours may also change, which will
impact average hourly costs. The market for e-bikes, batteries, and related technologies is also evolving rapidly, as is the
regulation of these goods, and for this reason there is no guarantee that the mix of items available to workers will remain
consistent over time. For these reasons, the Department may consider reassessing expenses after an appropriate interval.
Multi-Apping
In response to comments, and in light of changes to the basis of pay discussed below, in the Second Proposed Rule the
Department is reducing the minimum pay rate to account for the time workers spend connected to multiple apps (“multi-
apping”).
Comments:
Several commenters, including Grubhub, Uber Eats, DoorDash, tech industry advocates, and business advocates
contended that because workers spend a significant amount of time simultaneously engaged in trip time or on-call time on
multiple apps, the Department’s methodology produces total pay per hour that is above the level intended under the rule.
These commenters recommended that the Department incorporate into its minimum pay methodology an adjustment to
account for this practice of “multi-apping.” This adjustment is included in Table 1, above.
Response:
The Department is incorporating this recommendation. Under the First Proposed Rule framework, apps would have
reduced the proportion of time that workers spent on-call. (Report at 32.) This would have also led to less multi-apping, as
workers who were more engaged during their time on an app would have less need and ability to simultaneously work for
another app. However, under the Second Proposed Rule, if apps use the alternative method for determining minimum pay,
this may result in continued high levels of multi-apping. This is because an app using the alternative method pays its
workers the same amount regardless of how much time they spend on-call. For this reason, an adjustment to the rate for
multi-apping is appropriate. The study found that in the fourth quarter of 2021 workers spent an average of 17.7% of their
combined trip time and on-call time logged into multiple apps simultaneously (Report at 5), that during this time they
were connected to 2.02 apps, on average, and that multi-apping occurred at all apps. Department assumes that Uber Eats,
Grubhub, and DoorDash, which do not currently pay workers for on-call time, will choose the alternative method, and that
Relay, which already pays workers for on-call time, will choose the standard method. The Second Proposed Rule
therefore applies a multi-apping adjustment factor of 0.8471 in its calculation of the minimum pay rate for both the
alternative and standard methods. This figure represents the unduplicated work hours of food delivery workers (i.e., the
10
FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023
NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023
time a food delivery worker spends engaged in on-call time or trip time with at least one app), divided by the total
recorded hours of food delivery workers (i.e., the sum of a food delivery workers’ on-call time and trip time at each of the
apps they work for).
1
The calculation is as follows: (1 - 0.177) + (2.02 x 0.177) = 0.8471.
The fourth quarter of 2021 was chosen as the reference period for the multi-apping adjustment because this is the sole
period for which the Department received data from the apps to perform such an analysis. The Department subpoenaed
this information from the apps for a longer time period, but apps did not produce it. The proportion of time spent multi-
apping can be affected by many factors and potentially by implementation of the minimum pay rate itself. For this reason,
the Department may in future rulemaking revise the multi-apping adjustment once apps, workers, consumers, and
restaurants have adjusted to the new rule. In advance, the Department is amending the recordkeeping requirements in this
Second Proposed Rule to include food delivery worker taxpayer identification number, which will ensure the Department
can access the information necessary to re-estimate multi-apping when warranted.
Basis of Pay
The Department made changes in the Second Proposed Rule to add an alternative to the methodology for calculating
compensation to workers for trip time and on-call time, in consideration of comments and recommendations received
from apps, tech industry advocates, and workers.
The First Proposed Rule required an app to satisfy two requirements each week: an individual pay requirement and an
aggregate pay requirement.
1) Individual Pay Requirement: The app’s payment to each delivery worker, individually, would have to meet or
exceed the minimum pay rate multiplied by the sum of each individual worker’s own trip time during the week;
and
2) Aggregate Pay Requirement: The app’s total payments to all its delivery workers, together, would have to meet
or exceed the minimum pay rate multiplied by the sum of all workers’ total trip time and on-call time during the
week.
(Report at 28.) This method combined two key features: 1) a requirement that apps assume financial responsibility for all
time that workers spend working, including on-call time and trip time, and 2) flexibility for apps to determine how they
pay each worker. (Report at 31.) Rationales underlying this method included: (1) to incentivize apps to make operational
changes to use workers’ time on the apps more efficiently, thereby increasing deliveries per hour, partially offsetting apps’
increase in unit labor costs associated with higher pay, and increasing workers’ tips per hour; (2) to accommodate the
variety of pay arrangements already present in the industry, which includes per-trip rates and hourly pay; (3) to guarantee
that each app will pay at or above the intended average hourly pay each week, regardless of what variations occur in the
mix of trip time and on-call time; and (4) to use a method that is feasible to implement for both apps and the Department.
(Report at 31-32.)
Comments:
Comments from Uber Eats, DoorDash, Grubhub, tech industry advocates, and business advocates stated that the minimum
pay rule should not require apps to compensate workers for aggregate on-call time. These commenters contended that the
aggregate on-call payment component of the rule would require apps to make operational changes that (i) control labor
supply by restricting platform access; (ii) limit worker flexibility to reject trip offers; and (iii) create earnings uncertainty
for workers. Some food delivery workers and worker advocacy groups shared similar concerns.
To compensate workers for on-call time, Uber Eats and DoorDash suggested that the Department apply a fixed, industry-
wide multiplier to the minimum pay rate, which would be paid on each worker’s trip time. These commenters analogized
11
FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023
NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023
favorably to the TLC framework for high-volume for-hire vehicle drivers, under which the minimum pay rate is set based
on an industry-wide utilization rate multiplier that indirectly compensates workers for on-call time. These commenters
also recommended that, in calculating a minimum pay rate applicable to trip time, the Department include only a subset of
on-call time. Uber Eats suggested including only the on-call time between trip offers. DoorDash suggested including only
the on-call time that precedes an accepted trip offer.
Comments from many food delivery workers, worker advocacy groups, elected officials, and industry researchers
emphasized the importance of compensating workers for on-call time. These commenters described workers’ long wait
times to receive trip offers and described the ways in which unpaid on-call time places economic pressure on workers to
accept trip offers for very low pay, rather than continue waiting on-call for no pay. These commenters also noted that
other essential workers are paid for on-call time. However, some of these commenters expressed concern about the
aggregate pay methodology, noting that it may not result in adequate compensation if some workers still receive no pay at
all for their on-call time. Some of these commenters urged the Department to require payment of the full minimum pay
rate for all trip time and on-call time, with some recommending integration of a utilization rate into the calculation of
minimum pay.
Response:
The Second Proposed Rule is responsive to, and accommodates, key priorities apps and workers raised in comments. In
the Second Proposed Rule, the Department retained the individual pay and aggregate pay requirements set forth in the
First Proposed Rule, now referred to as the standard method. However, after consideration of relevant comments, the
Department revised the First Proposed Rule to allow an alternative to the standard method. As suggested by apps in
comments, the alternative method would allow apps to pay workers for trip time only at a set multiplier of the standard
minimum pay rate, so that workers are paid a rate for trip time that indirectly compensates them for uncompensated on-
call time. Under the alternative method, the alternative minimum pay rate is calculated by dividing the minimum pay rate
by 60%. The 60% figure reflects the average weekly utilization rate from January 2021 through June 30, 2022 for Uber
Eats, Grubhub, and DoorDash, combin
Preview
FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023 New York City Department of Consumer and Worker Protection Notice of Public Hearing and Opportunity to Comment on Proposed Rules What are we proposing? The Department of Consumer and Worker Protection (“DCWP” or “Department”) is proposing to add rules establishing methods for determining the minimum payments that must be made to a food delivery worker by a third-party food delivery service or third-party courier service, as required by New York City Administrative Code § 20- 1522. When and where is the hearing? DCWP will hold a public hearing on the proposed rule. The public hearing will take place at 11:00am on April 7. The public hearing will be accessible by phone and videoconference. To participate in the public hearing via phone, please dial 646-893-7101 o Meeting ID: 273 020 226 537 o Passcode: R3sJ2u To participate in the public hearing via videoconference, please follow the online link: https://tinyurl.com/nhcp5t8d o Meeting ID: 273 020 226 537 o Passcode: R3sJ2u How do I comment on the proposed rules? Anyone can comment on the proposed rules by: Website. You can submit comments to DCWP through the NYC rules website at http://rules.cityofnewyork.us. Email. You can email comments to Rulecomments@dcwp.nyc.gov. By speaking at the hearing. Anyone who wants to comment on the proposed rule at the public hearing must sign up to speak. You can sign up before the hearing by calling (212) 436-0396. You can also sign up on the phone or videoconference before the hearing begins at 11:00am on Friday, April 7. You can speak for up to three minutes. Is there a deadline to submit comments? Yes. You must submit any comments to the proposed rule on or before Friday, April 7. What if I need assistance to participate in the hearing? You must tell DCWP’s External Affairs division if you need a reasonable accommodation of a disability at the hearing. You must tell us if you need a sign language interpreter. You may tell us by telephone at (212) 436-0210 or by email at Rulecomments@dcwp.nyc.gov. Advance notice is requested to allow sufficient time to arrange the accommodation. Please tell us by Friday, March 31. Can I review the comments made on the proposed rules? You can review the comments made online on the proposed rules by going to the website at http://rules.cityofnewyork.us/. A few days after the hearing, all comments received by DCWP on the proposed rule will be made available to the public online at http://www1.nyc.gov/site/dca/about/public- hearings-comments.page. What authorizes DCWP to make this rule? Sections 1043 and 2203(f) of the New York City Charter and Sections 20- 1506(a), 20-1507(c), and 20-1522(a)(3) and (d) of the New York City Administrative Code authorize the Department of Consumer and Worker Protection to make these proposed rules. The proposed rule was included in the agency’s regulatory agenda. Where can I find DCWP’s rules? The Department’s rules are in Title 6 of the Rules of the City of New York. 1 FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023 What laws govern the rulemaking process? DCWP must meet the requirements of Section 1043 of the City Charter when creating or changing rules. This notice is made according to the requirements of Section 1043 of the City Charter. 2 FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023 Statement of Basis and Purpose of Proposed Rule The Department of Consumer and Worker Protection (“DCWP” or “Department”) proposes these rules to implement Local Law 115 of 2021, which required DCWP to study the pay and working conditions of food delivery workers and, based on the results of its study, to establish a method for determining the minimum payments that third-party food delivery services and third-party courier services (together, “apps”) must pay to food delivery workers. See NYC Admin. Code § 20-1501 (defining “food delivery worker,” “third-party food delivery service,” and “third-party courier service”). Background. Prior to the passage of Local Law 115 of 2021, there were no minimum earnings protections for food delivery workers who work for apps as independent contractors. The legislative record indicated that these workers faced low pay and high expenses. Local Law 115 of 2021 charged DCWP with studying this workforce and developing an appropriate minimum pay rate to ensure adequate compensation for these workers. First Proposed Rule. To implement Local Law 115 of 2021, DCWP published a proposed rule in the City Record on November 16, 2022 (“First Proposed Rule”). The First Proposed Rule made the following amendments to Subchapter H, of Chapter 7 of Title 6 of the Rules of the City of New York: Section 7-801 added definitions of “on-call time”, “pay period”, and “trip time”; Section 7-805 added recordkeeping and reporting obligations for a third-party food delivery service or third-party courier service; Section 7-806 clarified what constitutes “required” travel across a bridge or through a tunnel; Section 7-807 established that compensation must be calculated for each pay period; and Section 7-810 set minimum pay rates, the time periods for which such pay rates apply, and the inflation adjustments required for such pay rates. Concurrently with the publication of the First Proposed Rule, DCWP published a report titled A Minimum Pay Rate for App-Based Restaurant Delivery Workers in NYC (“Report”). Sections 1 through 4 of the Report discussed the Department’s sources, methods, and findings concerning the delivery industry and the working conditions of food delivery workers. (Report at 1-26.) Section 5 of the Report described the First Proposed Rule. (Report at 27-33.) Section 6 of the Report modeled the impacts of the First Proposed Rule on food delivery workers, apps, restaurants, and consumers. (Report at 34-36.) The First Proposed Rule was the subject of a public hearing held on December 16, 2022. The Department received comments on the First Proposed Rule from food delivery workers, third-party food delivery services (Uber Eats, GrubHub, and DoorDash), a third-party courier service (Relay), worker advocates, transportation safety advocates, restaurants, researchers, elected officials, and members of the public, among others. Second Proposed Rule. The Department made certain changes after consideration of comments received in response to the First Proposed Rule and is now proposing these revised proposed rules (“Second Proposed Rule”). Specifically, the Department is making the following changes from the First Proposed Rule: Section 7-801 retains the definitions of “on-call time,” “pay period,” and “trip time” from the First Proposed Rule and adds definitions of “cancellation,” “cancelled,” “internal identifier,” and “utilization rate.” Section 7-805 retains most recordkeeping and reporting obligations for a third-party food delivery service or third-party courier service from the First Proposed Rule, but narrows the scope of apps’ reporting obligations and adds to apps’ recordkeeping requirement an obligation to maintain a food delivery worker’s taxpayer identification number and certain information about a food delivery worker’s phone. Section 7-806 retains the clarification of what constitutes “required” travel across a bridge or through a tunnel; from the First Proposed Rule and adjusts apps’ disclosure requirements to reflect changes to the minimum pay rate. Section 7-810: retains the inflation adjustment methodology from the First Proposed Rule, adjusts the minimum pay rate to reflect “multi-apping” and to incorporate the latest inflation data; renames the minimum pay method 3 FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023 set forth in the First Proposed Rule “the standard method;” adds an alternative method for determining minimum pay; adjusts the effective date of implementation; and adjusts the phase-in schedule for the minimum pay rate. The Second Proposed Rule also corrects minor typographical errors in the First Proposed Rule and makes technical corrections to clarify certain text. The “Standard Method” to Meet the Minimum Payment Requirement The Second Proposed Rule retains the individual pay and aggregate pay requirements set forth in the First Proposed Rule for apps to determine the minimum payments they must make to food delivery workers each week. In the Second Proposed Rule these two requirements are referred to as the “standard method.” Under the standard method, an app’s payment to each delivery worker, individually, would have to meet or exceed the minimum pay rate multiplied by the sum of each individual worker’s own trip time during the week; and the app’s total payments to all its delivery workers, together, would have to meet or exceed the minimum pay rate multiplied by the sum of all workers’ total trip time and on- call time during the week. The “Alternative Method” to Meet the Minimum Payment Requirement After consideration of relevant comments, the Department has added an alternative option to the standard method. Under the alternative method, an app must pay each food delivery worker individually for trip time at no less than the alternative minimum pay rate. The alternative minimum pay rate is calculated by dividing the minimum pay rate by 60%. Under this method, food delivery workers have a right to higher pay for their trip time, but no additional right to compensation for their on-call time. The 60% figure reflects the proportion of time food delivery workers spend engaged in trips, known as the “utilization rate.” An app may choose the alternative method or the standard method, provided that after April 1, 2024, an app may only choose the alternative method if its food delivery workers, in aggregate, have a utilization rate of at least 53% (i.e., they spend at least 53% of their trip time and on-call time engaged in trips). Table 1 summarizes the calculations the Department performed to develop the minimum pay rate under the First Proposed Rule and Second Proposed Rule. Table 1. Minimum Pay Rate Calculations Under the First Proposed Rule and Second Proposed Rule ($) First Proposed Second Proposed Base Pay Rule Rule Pay for Wages and Time Off 18.34 18.12 Base Pay Subtotal, less Adjustment for Medicare and Social Security Contributions Adjustment for Medicare and Social Security Contributions 1.52 1.50 Base Pay Subtotal x employer share of Medicare and Social Security contributions (7.65%) Base Pay Subtotal 19.86 19.62 Workers’ Compensation Workers’ Compensation if App Delivery Workers were Employees 1.44 1.42 Pay for Wages and Time Off x expected costs (7.84%) Adjustment for Medicare and Social Security Contributions 0.26 0.26 Workers’ Compensation Subtotal, less the employer and employee shares of Medicare and Social Security contributions (15.3%) 4 FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023 Workers’ Compensation Subtotal 1.70 1.68 Pay such that after adjustment for Medicare and Social Security contributions (15.3%), app delivery workers receive the same value as the coverage they would receive if they were employees Expense Component Average Hourly Expenses of E-Bike Workers 2.26 2.26 See Report at 18-20, 30-31 Total Subtotal 23.82 23.56 Sum of Base Pay Subtotal, Workers’ Compensation Subtotal, and Average Hourly Expenses of E-Bike Workers Adjustment for Multi-Apping 0.00 -3.60 Component Subtotal x multi-apping adjustment factor (1 - 0.8471) (applies to Second Proposed Rule only) Adjusted Total 23.82 19.96 Sum of Subtotal and Adjustment for Multi-Apping Notes: Adapted from Report at 31. Table 2 summarizes the phase-in schedule under the First Proposed Rule and Second Proposed Rule. Table 2. Minimum Pay Rate Under the First Proposed Rule and Second Proposed Rule, 2023-2025 ($) First Proposed Rule Second Proposed Rule 2023 17.87 17.96 April 1, 2024 20.25 18.96 April 1, 2025 23.82 19.96 Notes: All values shown are prior to inflation adjustment. In the First Proposed Rule, the 2023 rate was scheduled to take effect January 1, 2023. In the Second Proposed Rule, the 2023 rate takes effect 30 days after adoption. The following sections discuss key components of the Second Proposed Rule and summarize the Department’s deliberations on comments received from the public on these components. Base Pay Component The Department made minor changes to the base pay component of the minimum pay rate in the Second Proposed Rule. The base pay component of the rate in the Second Proposed Rule is $19.62, a reduction of $0.24 from the original proposed $19.86. The basis for the base pay component of the rate is similar in the First Proposed Rule and the Second Proposed Rule. For both the First Proposed Rule and Second Proposed Rule, the Department derived the base pay component of the rate from the New York City Taxi and Limousine Commission’s (TLC) minimum per-minute payment rate for high-volume for-hire vehicle service drivers (“high-volume drivers”), which TLC developed as the independent contractor equivalent of the 5 FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023 2019 minimum wage. (Report at 21.) When first implemented, this rate was $17.22 per hour. (Id.) TLC has updated the $17.22 rate for inflation several times since. (Id.) In proposed rules published on September 6, 2022, TLC proposed an inflation-adjusted rate of $19.86 per hour, which reflected inflation data through June 2022. (Id.; Proposed 35 RCNY § 59D-22(a)(2) and (b)(1).) For parity, the Department also used $19.86 as the base pay component in its First Proposed Rule. (Report at 29.) Since then, TLC has implemented a $19.62 per hour rate for “high-volume drivers,” reflecting the December price level. For parity, the Department is also using $19.62 as the base pay component in its Second Proposed Rule. Comments: Several commenters, including members of the public, elected officials, worker advocacy groups, bicycle safety advocates, and food delivery workers, expressed support for the base pay component, noting that as independent contractors these workers do not receive a minimum wage or other employee benefits. Many workers described low pay they currently earn working for apps and their need for a higher wage to survive in New York City and support their families. Several described the impacts of recent inflation on their ability to earn a living working for apps. DoorDash, Uber Eats, Grubhub, and tech industry advocates commented that the base pay component of the rate should factor in workers’ tip earnings or should be based on the hourly pay of tipped workers. Uber Eats contended that to the extent an earnings standard is based on the minimum wage equivalent, it should not be adjusted for inflation and should instead be adjusted based on future increases in the minimum wage. Uber Eats also contended that delivery workers should be paid less than high-volume drivers, citing differences between the two occupations, including differences between transporting people and food, licensure requirements, expenses, and skillsets. Conversely, workers, worker advocates, and industry researchers commented that tips are unreliable, and customers may decrease tips or not tip at all due to factors outside workers’ control. Some worker comments described situations in which customers revoked promised tips after receiving a delivery, leaving the worker with very low compensation for the trip. Uber Eats, DoorDash, Grubhub, and tech industry advocates commented that the base pay rate should take into consideration the flexibility of food delivery workers’ work arrangement and would appropriately be lower than the minimum wage applicable to employees. Some workers, while expressing a desire for higher pay, also described why they value the flexibility of gig work for apps. Conversely, industry researchers and other workers commented that the minimum pay rate should be increased to account for the unique stresses for food delivery workers who are managed by algorithms, including unpredictable availability of work, changing compensation levels, and management decisions based on customer ratings, acceptance rates, and delivery speeds. Response: The Department is not incorporating the recommendation to base the rate on the hourly pay of tipped workers for reasons set forth in the Report, which are summarized here. (Report at 29-30.) First, Section 20-1522(b) of the Minimum Pay Law states that “any minimum payment rate determined by the department pursuant to this section shall not include gratuities.” Using a tip credit rate as a base rate would conflict with the letter and spirit of that legal requirement. (Id.) Second, under New York State law, the tip credit is a special permission afforded to a subset of restaurants, not a general exception for delivery as an occupation. (Id.) Currently, the tip credit under New York State law does not apply to delivery workers employed by fast food restaurants or to delivery services in the convenience and grocery sectors that use an employee model and would not apply if the restaurant apps were to classify their workers as employees. (Id.) Finally, tips are an unreliable form of income and apps may respond to these rules by reducing or removing tipping features on their platforms. (Report at 23, 36.) The Department is not incorporating the recommendation to index the minimum pay rate to future changes in the New York State minimum wage. The base pay rate builds on the City’s existing determination of appropriate compensation for low-wage independent contractors and sets a clear and consistent standard for independent contractors working for apps in 6 FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023 related industries. Further, the real value of the New York State minimum wage of $15 has declined significantly due to inflation since it went into effect in December 2018, and it is not possible to predict when or whether the State Legislature will increase it. If the New York State minimum wage were to increase such that the food delivery worker minimum pay rate would no longer approximate the total compensation app-based restaurant delivery workers would receive if classified as employees, the Department can revisit the minimum pay rate in future rulemaking at that time. The Department is not incorporating the recommendation to set a lower rate due to the flexibility of app-based delivery work and is also not incorporating the recommendation to set a higher rate due to the unique stresses delivery workers face. As comments from apps, workers, and industry researchers demonstrate, app delivery can have unique benefits and challenges, from flexibility to instability. Each worker may subjectively value these characteristics of the work differently. Lastly, the Department is not incorporating Uber Eats’ recommendation to set a base pay component that differs from the per-minute rate guaranteed to high-volume drivers. The differences Uber Eats noted in expenses between the two workforces is not relevant to this base pay component of the rate; such differences are reflected in the expense component of the rates applicable to each workforce. The Department determined that the other differences Uber Eats cited do not support setting a different base pay rate between food delivery workers and high-volume drivers. There are close similarities between the two workforces, in that both are independent contractors performing on-demand piece work on mobile applications involving the transport of goods or persons short distances within New York City, and both receive customer tips. Further, as set forth in the Report, the TLC’s per-minute rate reflects a determination about the minimum amount that should be paid for an hour of a worker’s labor, regardless of occupation; differences in Medicare and Social Security contribution requirements between independent contractors and employees; and average levels of paid leave received by workers in a U.S. Bureau of Labor Statistics occupational category that includes both app delivery workers and high-volume drivers (production, transportation, and material moving employees). (Report at 29.) None of these factors distinguish delivery workers from high-volume drivers. Workers’ Compensation Component The Department made no changes to its method for calculating the workers’ compensation component of the rate in the Second Proposed Rule. However, in both the First Proposed Rule and Second Proposed Rule the Department calculates the workers’ compensation component as a function of the base rate. (see Table 1.) As a result, the change in the base pay component from $19.86 in the First Proposed Rule to $19.62 in the Second Proposed Rule produces a $0.02 reduction to the workers’ compensation component from $1.70 to $1.68. The purpose of the workers’ compensation component is to compensate for expected income loss and medical expenses associated with on-the-job injuries that food delivery workers experience. (Report at 30.) Although food delivery workers experience high rates of injury on the job, they do not have access to traditional workers’ compensation, as workers classified as employees in New York State do. Unlike high-volume drivers, who have the Black Car Fund, food delivery workers also do not have access to an alternative system for medical care and wage replacement for on-the-job injuries. (Id.) DCWP calculated the workers’ compensation component of $1.68 to provide for comparability to the actuarial value of the workers’ compensation coverage received by employed restaurant delivery workers in New York State (7.84% of payroll). The workers’ compensation component also includes an adjustment to reflect differences in how federal Medicare and Social Security contributions apply to independent contractor income and employee benefits (i.e., independent contractors pay 15.3% in contributions to Medicare and Social Security on their income, while an employee does not make any contributions to Medicare and Social Security on the value of benefits like workers’ compensation). This ensures that app delivery workers receive the same value, despite a less advantageous tax treatment. (Id.) The components of this adjustment are detailed in Table 1, above. Comments: Comments from Uber Eats, DoorDash, tech industry advocates, and business advocates stated that the minimum pay rate should not include a workers’ compensation component. These commenters contended that it was unlikely workers would purchase workers’ compensation coverage and recommended that the Department consider alternatives, such as 7 FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023 exempting apps that provide occupational accident insurance, requiring apps to offer occupational accident insurance, or working with New York State to establish a compensation fund for delivery workers, similar to the Black Car Fund that exists for rideshare drivers. DoorDash stated that it offers an occupational accident policy that covers medical expenses and disability payments for some occupational injuries and may stop doing so if it is required to pay the workers’ compensation component. Other commenters, including elected officials and food delivery workers, stated that the workers’ compensation component of $1.68 should be higher, because $1.68 is inadequate to compensate workers for the frequent workplace injuries they experience and the attendant out-of-pocket medical costs. Comments from food delivery workers and their family members described the dangers of delivery work, such as traffic accidents, robberies, assaults, and severe weather conditions. Some described suffering injuries on-the-job and incurring medical expenses and lost work time for which they received no compensation due to the lack of workers’ compensation coverage and stated that apps’ insurance coverage was burdensome or impossible to access. Response: After considering these comments, the Department determined that retaining the workers’ compensation component is necessary to compensate workers for lost income and out-of-pocket medical expenses associated with job-related injuries. Food delivery workers’ rates of injury and work-loss time are high. (Report at 24-26.) Workers report substantial out-of- pocket medical expenses associated with work related injuries that are not reimbursed by the apps. (Report at 26.) Comments show that three of the four largest apps offer no occupational injury or accident coverage. The occupational injury policy offered by DoorDash does not provide coverage for injuries sustained during on-call time; such injuries can and do occur before a worker accepts a trip or after dropping off a delivery. Its policy also contains coverage exclusions that make benefits difficult or impossible for injured workers to access, and includes coverage terms that are less generous than the requirements of the New York State workers’ compensation system. The purpose of the workers’ compensation component is not to enable workers to purchase their own insurance, as some commenters asserted. Rather, the purpose is to compensate food delivery workers for their exclusion from the workers’ compensation benefits available to most workers. Were food delivery workers to gain a legal right to a benefit equivalent to the workers’ compensation coverage currently available to employees, the Department may choose to revisit the workers’ compensation component at that time. The existing occupational injury coverage offered by DoorDash is inadequate to warrant exemption from the workers’ compensation component. However, in a future rulemaking the Department may consider providing for an exemption for policies that meet minimum coverage and accessibility criteria. In response to comments that $1.68 is inadequate, the Department acknowledges that its approach only partially compensates workers for injuries. The workers’ compensation benefit provided to employees in New York State also does not fully replace workers’ lost income or compensate for pain and suffering. Because the Department derived the workers’ compensation component to provide for equivalence with the benefits provided to employees, the minimum pay rate component also reflects these limitations. It is also possible that given food delivery workers’ exceptionally poor safety conditions (Report at 25), they may be at higher risk than the population of insured employees from which the Department derived the workers’ compensation component. However, the detailed data necessary to perform an actuarial analysis of food delivery workers’ work-related injury and illness costs does not exist. For this reason, the Department chose to base the component on the claims experience of the closest-comparable insured population within the New York State workers’ compensation system, despite this limitation. See Report at 22 (referring to employed delivery workers, who belong to rate class 7380, which includes commercial drivers, chauffeurs, and their helpers). Expense Component The Department made no changes to the $2.26 expense component of the rate in the Second Proposed Rule. The purpose of the expense component is to compensate food delivery workers for necessary expenses they incur to perform delivery work. (Report at 18-20; 30-31). The expense component of $2.26 is DCWP’s estimate of average hourly expenses for 8 FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023 workers who perform deliveries using an electric bicycle (“e-bike”), less the cost of traffic or parking tickets, which are not deductible under IRS rules. Comments: DoorDash, Uber Eats, their experts, and some tech industry advocates commented that the expense component of the rate is too high, arguing that the Department relied on a biased survey, did not account for use of equipment and services outside of delivery for restaurant apps, and did not account for tax deductibility of expenses. Some of these commenters proposed alternatives for the expense component of the minimum pay rate. Several other commenters, including members of the public, elected officials, worker advocacy groups, bicycle safety advocates, and food delivery workers, commented that the $2.26 expense component of the rate is too low, and recommended increasing it by $5.00 to $7.26 per hour. These commenters expressed concern that DCWP may not have adequately considered workers’ expenses for items such as GPS trackers, monthly subscriptions for GPS services, battery replacements, mopeds, gas, weather-proof clothing, safety gear, incidents of theft, insurance, registration, or anti-theft alarm devices. Response: After considering apps’ and workers’ comments and proposed alternatives, DCWP determined that $2.26 is appropriate for the expense component of the rate. First, DCWP’s expense measurement is methodologically sound. As part of its expense measurement, DCWP fielded a survey of all workers who accepted an offer to perform a delivery in NYC between October 1 and December 31, 2021 for Uber Eats, Grubhub, DoorDash, Relay, Chowbus, or HungryPanda, except a small number of workers whose contact information was missing or suppressed. (Report at 2.) In its fielding and analysis of this survey, the Department used appropriate controls to authenticate responses, exclude submissions from inattentive or unreliable respondents, and address possible non-response bias. (Report at 2-5.) The 8,000 responses the Department used from the survey represent a response rate of 6.5%, which is several times the rate obtained by leading academic researchers conducting surveys of low-wage work. (Report at 3.) The Department then validated these survey responses against matched administrative records from the apps. In consideration of the foregoing, the Department reviewed the methodological critiques provided in comments but was not persuaded that the survey is inappropriate for its applications within the Department’s expense calculations. Specifically, the Department used the survey to measure the frequency with which workers experience loss or theft of their e-bike, purchase replacement batteries or e-bike accessories, and buy and trade-in phones. The Department separately gathered market prices for relevant equipment from retailers and other independent sources, including for the specific makes and models of the phones workers reported buying and selling, and did not use workers’ recollections of the dollar amounts they spent on any item. (Report at 5.) Further, the Department’s methods for estimating e-bike depreciation, maintenance, and data plan costs did not draw on survey responses at all. To confirm that the Department’s estimates of e-bike-related expenses is not overstated, the Department, in a supplemental analysis, found that e-bike rentals and sales in promotions marketed by Uber Eats and DoorDash are significantly more expensive than the costs reflected in the expense component of the minimum pay rate. Additionally, the Second Proposed Rule amends apps’ recordkeeping requirements to include certain information about the phones food delivery workers use. This information will enable the Department to efficiently measure phone expenses without reliance on a survey should it choose to re- estimate expenses for use in future rulemaking. Second, DCWP’s method appropriately reflects the tax deductibility of expenses. The minimum pay method is designed such that a worker who deducts expenses from taxable income will be taxed on their earnings net of expenses. 9 FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023 Third, DCWP’s methodology for accounting for the use of equipment and services outside of app delivery is sound. With respect to phone expenses, the Department assumes that workers’ data plans, as well as all phones workers report purchasing for work with apps, are also used for personal use at typical levels, and allocates cost proportionate to use. Under this method, the expense component of the rate reflects only 37% of total phone costs. (Report at 19.) This is consistent with IRS principles. With respect to e-bikes and e-bike accessories, the Department attributes the entire cost to app delivery. Seventy percent of e-bike workers report app delivery as their only job, and another 7% as their main job. (Report at 15.) This sets a low upper limit on the amount of use such equipment could be put towards other purposes. Further, DCWP determined that e-bike and e-bike accessory costs should be fully covered by the minimum pay rate, and that the economies of scope some workers achieve by applying their equipment to additional uses should accrue to their benefit. Fourth, the Department is not incorporating the recommendation to increase the expense component of the rate by $5.00, as some commenters recommended. DCWP considered all appropriate expenses for the equipment, services, and accessories necessary to perform delivery on e-bikes, which is the most common and economical means of making most deliveries. (Report at 2-5; 18-20; 30-31.) However, the Department recognizes that some workers, such as car drivers, have higher expenses. Lastly, the Department notes that costs may change over time in ways that are difficult to predict in advance. For instance, workers may respond to higher pay by purchasing different equipment. Average hours may also change, which will impact average hourly costs. The market for e-bikes, batteries, and related technologies is also evolving rapidly, as is the regulation of these goods, and for this reason there is no guarantee that the mix of items available to workers will remain consistent over time. For these reasons, the Department may consider reassessing expenses after an appropriate interval. Multi-Apping In response to comments, and in light of changes to the basis of pay discussed below, in the Second Proposed Rule the Department is reducing the minimum pay rate to account for the time workers spend connected to multiple apps (“multi- apping”). Comments: Several commenters, including Grubhub, Uber Eats, DoorDash, tech industry advocates, and business advocates contended that because workers spend a significant amount of time simultaneously engaged in trip time or on-call time on multiple apps, the Department’s methodology produces total pay per hour that is above the level intended under the rule. These commenters recommended that the Department incorporate into its minimum pay methodology an adjustment to account for this practice of “multi-apping.” This adjustment is included in Table 1, above. Response: The Department is incorporating this recommendation. Under the First Proposed Rule framework, apps would have reduced the proportion of time that workers spent on-call. (Report at 32.) This would have also led to less multi-apping, as workers who were more engaged during their time on an app would have less need and ability to simultaneously work for another app. However, under the Second Proposed Rule, if apps use the alternative method for determining minimum pay, this may result in continued high levels of multi-apping. This is because an app using the alternative method pays its workers the same amount regardless of how much time they spend on-call. For this reason, an adjustment to the rate for multi-apping is appropriate. The study found that in the fourth quarter of 2021 workers spent an average of 17.7% of their combined trip time and on-call time logged into multiple apps simultaneously (Report at 5), that during this time they were connected to 2.02 apps, on average, and that multi-apping occurred at all apps. Department assumes that Uber Eats, Grubhub, and DoorDash, which do not currently pay workers for on-call time, will choose the alternative method, and that Relay, which already pays workers for on-call time, will choose the standard method. The Second Proposed Rule therefore applies a multi-apping adjustment factor of 0.8471 in its calculation of the minimum pay rate for both the alternative and standard methods. This figure represents the unduplicated work hours of food delivery workers (i.e., the 10 FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023 time a food delivery worker spends engaged in on-call time or trip time with at least one app), divided by the total recorded hours of food delivery workers (i.e., the sum of a food delivery workers’ on-call time and trip time at each of the apps they work for). 1 The calculation is as follows: (1 - 0.177) + (2.02 x 0.177) = 0.8471. The fourth quarter of 2021 was chosen as the reference period for the multi-apping adjustment because this is the sole period for which the Department received data from the apps to perform such an analysis. The Department subpoenaed this information from the apps for a longer time period, but apps did not produce it. The proportion of time spent multi- apping can be affected by many factors and potentially by implementation of the minimum pay rate itself. For this reason, the Department may in future rulemaking revise the multi-apping adjustment once apps, workers, consumers, and restaurants have adjusted to the new rule. In advance, the Department is amending the recordkeeping requirements in this Second Proposed Rule to include food delivery worker taxpayer identification number, which will ensure the Department can access the information necessary to re-estimate multi-apping when warranted. Basis of Pay The Department made changes in the Second Proposed Rule to add an alternative to the methodology for calculating compensation to workers for trip time and on-call time, in consideration of comments and recommendations received from apps, tech industry advocates, and workers. The First Proposed Rule required an app to satisfy two requirements each week: an individual pay requirement and an aggregate pay requirement. 1) Individual Pay Requirement: The app’s payment to each delivery worker, individually, would have to meet or exceed the minimum pay rate multiplied by the sum of each individual worker’s own trip time during the week; and 2) Aggregate Pay Requirement: The app’s total payments to all its delivery workers, together, would have to meet or exceed the minimum pay rate multiplied by the sum of all workers’ total trip time and on-call time during the week. (Report at 28.) This method combined two key features: 1) a requirement that apps assume financial responsibility for all time that workers spend working, including on-call time and trip time, and 2) flexibility for apps to determine how they pay each worker. (Report at 31.) Rationales underlying this method included: (1) to incentivize apps to make operational changes to use workers’ time on the apps more efficiently, thereby increasing deliveries per hour, partially offsetting apps’ increase in unit labor costs associated with higher pay, and increasing workers’ tips per hour; (2) to accommodate the variety of pay arrangements already present in the industry, which includes per-trip rates and hourly pay; (3) to guarantee that each app will pay at or above the intended average hourly pay each week, regardless of what variations occur in the mix of trip time and on-call time; and (4) to use a method that is feasible to implement for both apps and the Department. (Report at 31-32.) Comments: Comments from Uber Eats, DoorDash, Grubhub, tech industry advocates, and business advocates stated that the minimum pay rule should not require apps to compensate workers for aggregate on-call time. These commenters contended that the aggregate on-call payment component of the rule would require apps to make operational changes that (i) control labor supply by restricting platform access; (ii) limit worker flexibility to reject trip offers; and (iii) create earnings uncertainty for workers. Some food delivery workers and worker advocacy groups shared similar concerns. To compensate workers for on-call time, Uber Eats and DoorDash suggested that the Department apply a fixed, industry- wide multiplier to the minimum pay rate, which would be paid on each worker’s trip time. These commenters analogized 11 FILED: NEW YORK COUNTY CLERK 07/06/2023 01:18 PM INDEX NO. 155947/2023 NYSCEF DOC. NO. 37 RECEIVED NYSCEF: 07/06/2023 favorably to the TLC framework for high-volume for-hire vehicle drivers, under which the minimum pay rate is set based on an industry-wide utilization rate multiplier that indirectly compensates workers for on-call time. These commenters also recommended that, in calculating a minimum pay rate applicable to trip time, the Department include only a subset of on-call time. Uber Eats suggested including only the on-call time between trip offers. DoorDash suggested including only the on-call time that precedes an accepted trip offer. Comments from many food delivery workers, worker advocacy groups, elected officials, and industry researchers emphasized the importance of compensating workers for on-call time. These commenters described workers’ long wait times to receive trip offers and described the ways in which unpaid on-call time places economic pressure on workers to accept trip offers for very low pay, rather than continue waiting on-call for no pay. These commenters also noted that other essential workers are paid for on-call time. However, some of these commenters expressed concern about the aggregate pay methodology, noting that it may not result in adequate compensation if some workers still receive no pay at all for their on-call time. Some of these commenters urged the Department to require payment of the full minimum pay rate for all trip time and on-call time, with some recommending integration of a utilization rate into the calculation of minimum pay. Response: The Second Proposed Rule is responsive to, and accommodates, key priorities apps and workers raised in comments. In the Second Proposed Rule, the Department retained the individual pay and aggregate pay requirements set forth in the First Proposed Rule, now referred to as the standard method. However, after consideration of relevant comments, the Department revised the First Proposed Rule to allow an alternative to the standard method. As suggested by apps in comments, the alternative method would allow apps to pay workers for trip time only at a set multiplier of the standard minimum pay rate, so that workers are paid a rate for trip time that indirectly compensates them for uncompensated on- call time. Under the alternative method, the alternative minimum pay rate is calculated by dividing the minimum pay rate by 60%. The 60% figure reflects the average weekly utilization rate from January 2021 through June 30, 2022 for Uber Eats, Grubhub, and DoorDash, combin