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Exhibit 2
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New York City Department of Consumer and Worker Protection
Notice of Adoption of Final Rule
Pursuant to the authority vested in the Department of Consumer and Worker Protection (“DCWP” or “Department”) by
Sections 1043 and 2203(f) of the New York City Charter and Sections 20-1507(c) and 20-1522(a)(3) of the New York City
Administrative Code, and in accordance with the requirements of Section 1043 of the Charter, the Department amends
Subchapter H of Chapter 7 of Title 6 of the Rules of the City of New York.
Statement of Basis and Purpose of Final Rule
The Department of Consumer and Worker Protection (“DCWP” or “Department”) adopts 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 pay protections for food delivery
workers who work for apps as independent contractors. The legislative record indicates that these workers face 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”). 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 discuss 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 describes the First Proposed Rule.
(Report at 27-33). Section 6 of the Report models the impacts of the First Proposed Rule on food delivery workers, apps,
restaurants, and consumers. (Report at 34-36).
The First Proposed Rule proposed the following amendments:
Section 7-801 to add definitions of “on-call time,” “pay period,” and “trip time”;
Section 7-805 to add the recordkeeping and reporting obligations for a third-party food delivery service or third-
party courier service;
Section 7-806 to clarify what constitutes “required” travel across a bridge or through a tunnel;
Section 7-807 to establish that compensation must be calculated for each pay period; and
Section 7-810 to set the minimum pay rate and method requiring apps to pay each worker for their trip time and
to pay all workers, in the aggregate, for their combined on-call time using a methodology of their choosing.
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, consumers, and members of the public, among others.
Second Proposed Rule. After considering the comments received, the Department published a Second Proposed Rule on
March 7, 2023, which reflected the following changes from the First Proposed Rule:
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Section 7-801 added definitions of “cancellation,” “cancelled,” “internal identifier,” and “utilization rate”;
Section 7-805 narrowed the scope of apps’ reporting obligations and added 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 adjusted apps’ disclosure requirements to reflect changes to the minimum pay rate;
Section 7-810 adjusted the minimum pay rate to reflect “multi-apping” and to incorporate additional inflation
data; renamed the minimum pay method set forth in the First Proposed Rule “the standard method”; added an
alternative method for determining minimum pay; adjusted the effective date of implementation; and adjusted the
phase-in schedule for the minimum pay rate; and
The Second Proposed Rule also corrected minor typographical errors in the First Proposed Rule and made
technical corrections to clarify certain text.
The Second Proposed Rule was the subject of a public hearing held on April 7, 2023. The Department received comments
on the Second 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, consumers, and members of the public, among others.
Final Rule. After considering the comments received, this Final Rule adopts the Second Proposed Rule, with the
following adjustments:
Provides for a limited “safe harbor” to the low-utilization floor required under the Alternative Method.
Provides for review of certain aspects of the rule based on updated data in the report due on September 24, 2024.
Table 1 summarizes the calculations the Department performed to develop the minimum pay rate under both the Final
Rule and the Second Proposed Rule.
Table 1. Minimum Pay Rate Calculations Under the Final Rule ($)
Base Pay
Pay for Wages and Time Off 18.12
Base Pay Subtotal ($19.62), less Adjustment for Medicare and Social Security Contributions
($1.50)
Adjustment for Medicare and Social Security Contributions 1.50
Base Pay Subtotal ($19.62) x employer share of Medicare and Social Security contributions
(7.65%)
Base Pay Subtotal 19.62
Workers’ Compensation
Workers’ Compensation if App Delivery Workers were Employees 1.42
Pay for Wages and Time Off x expected costs (7.84%)
Adjustment for Medicare and Social Security Contributions 0.26
Workers’ Compensation Subtotal, less the employer and employee shares of Medicare and
Social Security contributions ($1.68 x 15.3%). (Report at 30-31).
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Workers’ Compensation Subtotal 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 ($1.42)
Expense Component
Average Hourly Expenses of E-Bike Workers 2.26
See Report at 18-20, 30-31.
Total
Component Subtotals 23.56
Sum of Base Pay Subtotal, Workers’ Compensation Subtotal, and Average Hourly Expenses
of E-Bike Workers
-3.60
Adjustment for Multi-Apping
Component Subtotal x multi-apping adjustment factor [1 – 0.8471]
Adjusted Total 19.96
Sum of Subtotal and Adjustment for Multi-Apping
Notes: Adapted from the Report (at 31).
As in the Second Proposed Rule, the minimum pay rate in the Final Rule phases-in over three years. Table 2 summarizes
the phase-in schedule under the Final Rule.
Table 2. Minimum Pay Rate Under the Final Rule, 2023-2025 ($)
2023 17.96
April 1, 2024 18.96
April 1, 2025 19.96
Notes: April 1, 2024 and April 1, 2025 values shown are prior to inflation adjustment. In the Final Rule, the 2023 rate
takes effect 30 days after adoption.
The following sections summarize the Department’s deliberations on comments received from the public on the Second
Proposed Rule. Many public comments on the Second Proposed Rule restate the substance of comments offered on the
First Proposed Rule. For purposes of brevity, the Department incorporates by reference all prior pertinent responses to
comments on the First Proposed Rule and focuses this Statement of Basis and Purpose on new issues raised in comments
on the Second Proposed Rule.
Methods for Determining Minimum Pay
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The Final Rule retains the two methods for calculating compensation to workers described in the Second Proposed Rule
(the Standard Method and the Alternative Method), with one adjustment. Specifically, the Final Rule adopts a modified
version of DoorDash’s proposal for a “safe harbor” to the low-utilization floor under the Alternative 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.
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%.
The 60% figure reflects the average “utilization rate” of apps that pay per trip. An app’s utilization rate is the amount of
“trip time” workers engage in for the app, divided by their workers’ total time connected to that app, including both “trip
time” and “on-call time.” “Trip time” is the time between acceptance of a trip offer and its completion or cancellation and
“on-call time” is the time in which a worker is connected to an app in a status where they can receive or accept trip offers,
excluding “trip time.” Under the Alternative 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.
An app may choose the Alternative Method or the Standard Method, provided that on or after April 1, 2024, an app may
only choose the Alternative Method for a pay period if it has a utilization rate above 53%, with limited exceptions. The
incorporation of a low-utilization floor of 53% ensures that workers who are only paid for trip time have adequate
opportunities to pick up trips to earn income and do not spend excessive time on-call waiting for trip offers. In the Second
Proposed Rule, there was no exception to the 53% requirement. In the Final Rule, on or after April 1, 2024, an app may
still use the Alternative Method despite having a utilization rate below 53% in up to two pay periods per year. For all
other pay periods starting on or after April 1, 2024, the 53% low-utilization floor applies. For purposes of this exception, a
year begins with the first pay period that begins on or after April 1 of a calendar year and ends with the last pay period
that begins on or before March 31 of the following calendar year.
The Alternative Method implements the method of payment proposed by Uber Eats, DoorDash, and Grubhub in their
comments to the First Proposed Rule, with some modification. The change to the low-utilization floor in the Final Rule
implements DoorDash’s proposal in its comment to the Second Proposed Rule.
Under both the Standard Method and Alternative Method apps assume financial responsibility for time that workers spend
working, including all trip time and on-call time. In the Standard Method, this result is achieved because apps must pay
for all trip time and aggregate on-call time. In the Alternative Method, the incorporation of a utilization rate of 60%
ensures that workers are paid a rate for trip time that indirectly compensates them for uncompensated on-call time. The
two methods accommodate the variety of pay arrangements already present in the industry.
Comment:
Comments from Uber Eats, Grubhub, and DoorDash stated that the alternative minimum pay rate should be lowered to
only account for a subset of delivery workers’ on-call time. Uber Eats recommended calculating the alternative minimum
pay rate using an 87% utilization rate, and Grubhub and DoorDash recommended using a 1.156 multiplier; each of these
calculations produces approximately the same result. The apps argued that their recommendations appropriately exclude
on-call time that precedes a rejected or expired trip offer and time between completing a trip and logging off the app. Uber
Eats commented that its recommendation was based on analysis of its own data. Grubhub and DoorDash commented that
their recommendation was derived from data published by the Department. Uber Eats, Grubhub, and DoorDash also
reiterated similar comments in opposition to the compensation of on-call time in the Standard Method, which were first
submitted in response to the First Proposed Rule.
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Response:
The Department is not adopting the apps’ recommendation to exclude certain portions of on-call time from the utilization
rate calculation, which would reduce the alternative minimum pay rate and workers’ incomes. The Department previously
discussed its rationale for compensating all on-call time under the Standard Method. (Report at 32; Second Proposed Rule
at 12). The Department’s reasoning applies equally to treatment of on-call time under the Alternative Method. The
Department is required to set the minimum pay rate based on the results of its study, which must consider delivery
workers’ hours, and is further required to establish the minimum pay rate in consideration of “the on-call and work hours
of food delivery workers.” NYC Admin. Code § 20-1522(a)(3). For these reasons, it would not be appropriate to exclude
portions of workers’ on-call time from the alternative minimum pay rate calculation. The study did not identify any basis
for departing from the precedent set by the NYC Taxi and Limousine Commission’s (TLC) minimum pay rule in
compensating all on-call time, including time workers spend waiting for offers they find acceptable and for offers they
find unacceptable. Like for-hire vehicle drivers, the ongoing assessment of trip offers is intrinsic to work on the apps and
fundamental to how workers manage the earnings uncertainty created by apps’ business model. Further, the apps’
suggestions to use a 1.156 multiplier or 87% utilization rate are arbitrary and not based on the results of the study, which
found that on-call time represents 24 out of every 60 minutes workers log on the apps.
In setting the minimum pay rate, the Department is also required to consider, among other factors, “the adequacy of food
delivery worker income considered in relation to trip-related expenses.” NYC Admin. Code § 20-1522(a)(3). The apps’
proposed multiplier results in inadequate food delivery worker income when considered in relation to their expenses. The
Department estimates that the alternative minimum pay rate based on a 1.156 multiplier proposed by apps would provide
delivery workers with $16.34 per hour worked, or $13.52 after accounting for expenses. (Table 3). By comparison, for-
hire vehicle drivers covered by the TLC’s minimum pay rule receive $19.62 per hour, not including the expense
component of their pay, and receive coverage for work-related injuries through the Black Car Fund. (Second Proposed
Rule at 5-7). If apps classified delivery workers as employees, the minimum pay and benefit requirements would be worth
$23.21 per hour by 2025. (Table 5).
Table 3. Analysis of Delivery Worker Pay per Hour Worked Under an Alternative Minimum Pay Rate Based on a
1.156 Multiplier ($)
Minimum Pay Rate 19.96
Alternative Minimum Pay Rate 23.07
Minimum Pay Rate (19.96) x Multiplier (1.156)
Pay per Hour Worked
Alternative minimum pay rate ($23.07) x Utilization rate (0.60) ÷ Multi-apping Adjustment Factor
16.34
(0.8471)
Pay per Hour Worked, Less Expenses
Pay per hour worked ($16.34), less expenses ($2.82) 13.52
Notes: Projection is for 2025. Expenses are as described in the Report (at 18, 34).
Comment:
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Uber Eats raised several objections to the Department’s use of a 60% utilization rate to calculate the alternative minimum
pay rate, in addition to the objections discussed above related to on-call time. Uber Eats asserted that the Department did
not adequately explain: why the Department used data from the period January 1, 2021 through June 30, 2022 to obtain
the 60% rate, as opposed to reliance on more recent data; what utilization rates the Department would have obtained had it
calculated the utilization rate over other periods; and how the Department calculated average utilization. It also objected
to the Department’s decision to exclude Relay from the dataset it used to obtain the 60% utilization rate and proposed
instead that the alternative minimum pay rate reflect only Relay’s data and exclude data from all other apps. Finally, it
asserted that the utilization rates exhibited by apps prior to implementation of the minimum pay rule are irrelevant for
purposes of calculating the alternative minimum pay rate.
Response:
The Department used the weekly aggregate data provided by Uber Eats, Grubhub, and DoorDash to calculate their
combined utilization for each week from January 1, 2021 through June 30, 2022, as follows:
𝑇𝑜𝑡𝑎𝑙 𝑡𝑟𝑖𝑝 𝑡𝑖𝑚𝑒
𝑈𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑟𝑎𝑡𝑒 = (eq.1)
(𝑇𝑜𝑡𝑎𝑙 𝑡𝑟𝑖𝑝 𝑡𝑖𝑚𝑒 + 𝑇𝑜𝑡𝑎𝑙 𝑜𝑛-call 𝑡𝑖𝑚𝑒)
The Department then obtained the utilization rate used in the alternative minimum pay rate by taking the mean of the
weekly utilization rates calculated as above.
The Department used data from the period January 1, 2021 through June 30, 2022 because this is the data the apps
provided in response to the Department’s subpoenas in connection with the statutorily-required study. Utilization trended
down during this period. The combined weekly utilization rates for Uber Eats, Grubhub, and DoorDash during this period
are available on DCWP’s website. A quarterly summary is available below. (Table 4).
Table 4. Average Combined Weekly Utilization Rates for Uber Eats, Grubhub, and DoorDash, 2021 Q1 – 2022 Q2
Quarter Utilization Rate
2021 Q1 68%
2021 Q2 65%
2021 Q3 59%
2021 Q4 57%
2022 Q1 57%
2022 Q2 52%
Notes: Department analysis of weekly aggregate data obtained from apps.
The Department is not incorporating Uber Eats’s recommendations to include data from Relay in the utilization rate
calculation or to exclude data from other apps. The Department introduced the Alternative Method in response to requests
by Uber Eats, Grubhub, and DoorDash to better accommodate their existing operating models, which involve high levels
of on-call time. Therefore, basing the Alternative Method’s utilization rate and corresponding low-utilization floor on
these apps’ past experience is appropriate. In contrast, Relay has a model in which it pays workers for all trip time and on-
call time and achieves a high utilization rate, and this model is best accommodated by the Standard Method. Had the
Department based the Alternative Method’s utilization rate and corresponding low-utilization floor on Relay’s past
experience, both would be higher, and less reflective of the operating models the Alternative Method seeks to
accommodate. If Uber Eats, Grubhub, or DoorDash wish to change their operating models and instead pursue higher
utilization, they may do so under the Standard Method, and so a change to the Alternative Method is not necessary. To the
extent Uber Eats’ comment implies that the Department should calculate the alternative minimum pay rate consistent with
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high utilization while still permitting apps to operate with low utilization, this would result in inadequate pay per hour
worked, and so the Department is not incorporating this suggestion.
The Department will monitor apps’ utilization rates when the Final Rule is in effect. If utilization changes, the Department
will consider whether a corresponding change is warranted.
Comment:
Uber Eats and DoorDash expressed concern that requiring apps that use the Alternative Method to pay workers according
to the Standard Method if they fall below the 53% utilization floor in a pay period is unduly punitive and administratively
burdensome. Both apps recommended that instead of requiring apps to increase worker pay to the Standard Method to
account for excessive on-call time, the rule should require an app that falls below the 53% utilization floor to suspend
giving new workers access to the app’s platform until the 53% floor is achieved.
Uber Eats contended that apps using the Alternative Method should be permitted to account for utilization volatility by
calculating it on a monthly basis, instead of each pay period, and make retroactive payments to workers pursuant to the
Standard Method only if average utilization over the month falls below 53%. Uber Eats also asked for clarification about
how an app can account for multi-apping when determining whether it meets the 53% utilization floor.
DoorDash suggested that the Department incorporate a “safe harbor” whereby a platform using the Alternative Method
would be required to pay workers in accordance with the Standard Method only if it fell below the 53% utilization floor
on four or more weeks during a calendar year.
Uber Eats requested clarification of the calculations the Department performed to obtain the 53% low-utilization floor.
Response:
The Department calculated the low-utilization floor by measuring the standard deviation of weekly utilization rates for
Uber Eats, Grubhub, and DoorDash separately from January 1, 2021 to June 30, 2022. The Department then determined
that, among these three apps, the app with the median volatility had a standard deviation of 7% in its weekly utilization
rates. As previously explained, the alternative minimum pay rate is designed around expected average utilization of 60%.
Seven percent less than 60% is 53%. Setting the low-utilization floor at this level should lead apps to maintain average
utilization rates around 60% and provide for greater consistency in utilization rates than they have previously, while still
allowing for some natural variation week to week.
The Department disagrees that the 53% utilization floor is punitive or administratively burdensome. The utilization floor
is not punitive and ensures that workers’ pay is not less than intended when averaged across all work time. Further, apps
can measure their utilization rates with data they are already capturing routinely. Application of the Standard Method is
not administratively burdensome, as an app can comply by paying workers a straight hourly rate for all work time, among
other practical formulas that would be consistent with the Standard Method.
The Department is not incorporating Uber Eats and DoorDash’s recommendation to require an app that falls below the
53% utilization floor to suspend giving new workers access to the app’s platform until the 53% floor is achieved. Such
specific regulation of labor usage is not necessary. Apps have flexibility to manage their own labor needs and costs within
the Final Rule framework and may choose to self-impose restrictions on platform access if they wish.
The Department is not adopting Uber Eats’ recommendation to allow apps to calculate their utilization rates on a monthly,
rather than weekly, basis. Application of the low utilization floor on a weekly basis ensures that workers are paid what
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they are owed in a timely manner. In response to Uber Eats’ request for clarification, the Department confirms that each
app is required to measure its own utilization rate. The Final Rule, like the Second Proposed Rule, accounts for multi-
apping by factoring it into the minimum pay rate, not into the measurement of the utilization rate.
The Department is, however, adopting a modified version of the “safe harbor” proposed by DoorDash. Under the Final
Rule, apps are allowed to use the Alternative Method on the first two pay periods that they have utilization below 53% in
any year (measured between April 1 and March 31), but for the remainder of the year may not use the Alternative Method
for any pay periods in which their utilization is below 53%. This relaxation of the low utilization floor provides apps with
additional room to accommodate occasional unexpected volatility without undermining the purpose of the low utilization
floor.
Comment:
Some commenters, including elected officials, workers, and worker advocacy groups contended that delivery workers
should be paid for their individual on-call time, and that apps should not be permitted to choose which workers they pay
for all aggregate on-call time using the Standard Method. 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. Accordingly, these commenters recommended that the Standard Method be converted to an hourly rate that
applies to each individual worker’s combined trip time and on-call time.
Response:
The Department is not incorporating this recommendation. The Department acknowledges the earnings certainty that an
hourly rate for each individual’s combined trip time and on-call time would provide. However, the Standard Method’s
aggregate payment requirement ensures appropriate average pay among the workforce as a whole for on-call time and
affords each app flexibility to make aggregate payments using a methodology of its choosing. The Department ultimately
determined that the benefits of affording apps this flexibility outweighed the benefits of a rule that would require apps to
pay each worker for their individual on-call time.
Base Pay Component
The Department made no changes to the base pay component of the minimum pay rate in the Final Rule.
Comment:
Comments from some workers, worker advocates, elected officials, and academic researchers reiterated prior comments in
support of a base pay component that significantly increases worker pay relative to the status quo, noting that as
independent contractors these workers do not receive a minimum wage or other employee benefits.
DoorDash, Uber Eats, Grubhub, Relay, and tech industry advocates reiterated prior comments that the base pay
component of the rate should be reduced to factor in workers’ tip earnings or should be based on the hourly pay of tipped
workers.
Response:
The Department did not make changes to the base pay component, which provides for parity with high-volume for-hire
vehicle drivers covered by the TLC’s minimum payment rate. The Department’s rationale for the base pay component is
the same as in the Second Proposed Rule. (Second Proposed Rule at 4-5). The Department did not incorporate the apps’
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recommendation to reduce the base pay component or match it to the hourly rate for tipped workers, for reasons discussed
previously. (Second Proposed Rule at 5).
Workers’ Compensation Component
The Department made no changes to its method for calculating the workers’ compensation component of the rate in the
Final Rule.
Comment:
Comments from Uber Eats, DoorDash, tech industry advocates, and business advocates reiterated previous
recommendations that the Department eliminate the workers’ compensation component because it would not actually be
used to purchase workers’ compensation coverage.
Response:
For the reasons stated previously (Report at 30, Second Proposed Rule at 6), the Department did not adopt this
recommendation and is maintaining the workers’ compensation component.
Expense Component
The Department made no changes to the $2.26 expense component of the rate in the Final 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). As in the Second Proposed Rule, the expense component of $2.26 is DCWP’s estimate of
average hourly expenses for 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. The expense component includes both phone-related and e-
bike-related expenses. (Report at 30).
Comment:
Elected officials and worker advocates reiterated prior comments that the Department should annually review worker
expenses and incorporate car expenses into the minimum pay rate. Some of these commenters also suggested adjusting
expenses annually using a price index specific to transportation and setting the expense component above the level
measured in the Department’s study because present expenses are unduly low due to workers’ low incomes.
Response:
For the reasons stated previously (Report at 31, Second Proposed Rule at 10), the Department did not adopt the
recommendation to incorporate car drivers’ higher expenses into the minimum pay rate.
With respect to comments regarding changes in expenses over time, in the Second Proposed Rule the Department noted
that, along with other factors, regulation of e-bikes and batteries may change in ways that affect worker expenses. (Second
Proposed Rule at 9). Since publication of the Second Proposed Rule, NYC enacted Local Law 39 of 2023, which prohibits
sale of electric bikes and batteries that do not meet certain safety certification standards. The Department plans to monitor
the potential impact of the new law on the costs of acquiring legal e-bikes and batteries within NYC, and to that end, has
added a new subsection 7-810(j) to the Final Rule. Subsection 7-810(j) requires the Department to review the expense
component of the minimum pay rate for the report required by Section 20-1522(d) of the Administrative Code on or
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before September 24, 2024 (“the 2024 Report”). The Department may revise the expense component in future rulemaking,
if warranted.
Multi-Apping Adjustment
The Department made no changes in the Final Rule to the multi-apping adjustment. The Department 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. As described in the Second Proposed Rule (at 10), the Alternative Method may result in
workers continuing to spend an average of 17.7% of their combined trip time and on-call time logged into multiple apps
simultaneously, and so a multi-apping adjustment based on this rate is appropriate. The 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 Final 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 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 = 0.8471.
x 0.177)
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.
Comment:
Several commenters, including the Comptroller, other elected officials, worker advocacy groups, and academic
researchers recommended that DCWP eliminate the multi-apping adjustment. These commenters stated that the multi-
apping adjustment inappropriately lowers the minimum pay rate, that multi-apping is a “canard” fabricated by the apps,
and/or to the extent multi-apping does occur, it does not justify lowering the minimum pay rate. Some of these
commenters also stated that the TLC minimum pay rule does not include a reduction for multi-apping for for-hire vehicle
drivers.
Apps’ comments expressed a need for a multi-apping adjustment because the Standard Method and Alternative Method
both require apps to compensate workers for on-call time, directly or indirectly. These commenters noted that some on-
call time occurs when workers are performing deliveries for one app while on-call for a second app. In their view,
overlapping periods of work time should not be compensated by multiple apps.
Response:
After considering all comments, DCWP determined that the multi-apping adjustment is appropriate. Workers are
connected to more than one app for 17.7% of their on-call and trip time, and the addition of the Alternative Method means
that apps have less incentive to increase their utilization rates and thereby decrease multi-apping. However, as Uber Eats
noted in its comment, apps may react to the implementation of the minimum pay rate by increasing utilization rates. If this
occurs, rates of multi-apping may decrease in the future. The Department will monitor rates of multi-apping after the Final
Rule is in effect using records the apps are required to provide to the Department, including worker taxpayer identification
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number, which will allow the Department to track multi-apping on the individual level from app to app. In the Final Rule,
the Department is required to review the multi-apping adjustment for the 2024 Report and may revise the multi-apping
adjustment in future rulemaking, if warranted.
Commenters who asserted that the TLC minimum pay rule does not account for multi-apping are mistaken. The TLC’s
minimum pay rule does account for multi-apping, though the mechanics differ from the Department’s minimum pay rule.
To obtain its trip time rate, the TLC divides its minimum pay rate by a measure of utilization that reflects multi-apping, 35
R.C.N.Y. § 59D-03(j), whereas the Department divides its minimum pay rate by a measure of utilization that does not
reflect multi-apping. Then, the Department applies a multi-apping adjustment to the minimum pay rate. For parity with
the TLC rate, a multi-apping adjustment is appropriate.
Phase-in
The Department made no changes to the phase-in of the minimum pay rate in the Final Rule. The minimum pay rate in the
Final Rule phases in at 90% of the full rate in 2023, 95% starting April 1, 2024, and 100% starting April 1, 2025. These
rates are $17.96 in 2023, $18.96 in 2024, and $19.96 in 2025. The rates in 2024 and 2025 are also subject to adjustment
for inflation.
Comment:
Several commenters, including elected officials, workers, worker advocates, and academic researchers contended that
DCWP should eliminate the phase-in for the minimum pay rate. These commenters state that the phase-in will result in
workers being paid a $12.69 subminimum hourly wage in 2023.
Response:
The Department disagrees with the assertion that the Final Rule provides for a $12.69 hourly rate. Table 5 presents the
Department’s calculation of the minimum pay rate during the phase-in period and a comparison to what the minimum
wage and benefit requirements would be if the apps were to classify their delivery workers as employees.
Table 5. Comparison of Delivery Worker Pay under the Final Rule with the Pay and Benefit Requirements that
would apply if Apps Classified Delivery Workers as Employees, 2023-2025 ($)
Delivery Worker Pay under the Final Pay and Benefit Requirements that
Rule would apply if Apps Classified
Delivery Workers as Employees
2023 2024 2025 2023 2024 2025
Pay and Benefits 21.20 22.38 23.56 21.09 22.50 23.21
Expenses (-) 2.98 2.90 2.82 0.00 0.00 0.00
Net Pay 18.22 19.48 20.74 21.09 22.50 23.21
Notes: For delivery workers covered under the Final Rule, pay and benefits are expressed per hour worked, after
accounting for multi-apping. The 2024 and 2025 minimum pay rates in the Final Rule are subject to inflation adjustment.
Expenses are assumed to decrease in equal increments from $3.06 per hour in 2022 (Report at 18) to $2.82 in 2025, due
to decreased use of cars for delivery (Report at 34). The minimum wage applicable to employees is $15.00 in 2023,
$16.00 in 2024, and $16.50 in 2025. The Department assumes employee health insurance costs per hour will remain
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constant between 2023 and 2025 as a percentage of payroll. All other employee pay and benefit calculations are as
published previously. (Report at 22).
Comment:
Other commenters, including Uber Eats and Doordash, contended that DCWP should adopt a phase-in schedule similar to
the First Proposed Rule, which was 75% in 2023, 85% in 2024, and 100% in 2025, to give apps time to adjust to increased
costs.
Response:
The Department is not adopting this recommendation. As stated previously, the Department agrees with commenters to
the First Proposed Rule that this phase-in provides for pay in 2023 and 2024 that would provide for inadequate worker
income in relation to workers’ trip-related expenses, which would fail to meet the commands of Local Law 115. (Second
Proposed Rule at 13).
Table 6 compares the apps’ proposed phase-in to what the minimum wage and benefit requirements would be if the apps
were to classify their delivery workers as employees.
Table 6. Comparison of Delivery Worker Pay under Apps’ Proposed Phase-In with the Pay and Benefit
Requirements that Would Apply if Apps Classified Delivery Workers as Employees, 2023-2025
Pay and Benefit Requirements that
Delivery Worker Pay under Apps’ would apply if Apps Classified
Proposed Phase-in Delivery Workers as Employees
2023 2024 2025 2023 2024 2025
Pay and Benefits 17.67 20.02 23.56 21.09 22.50 23.21
Expenses (-) 2.98 2.90 2.82 0.00 0.00 0.00
Net Pay 14.69 17.12 20.74 21.09 22.50 23.21
Notes: Methods are as described in Table 5.
The Department also notes that apps have had ample time to plan and adjust in advance of the effective date of the rule.
By the rule’s effective date, it will have been 21 months since the enactment of the Local Law, eight months since the
First Proposed Rule, four months since the Second Proposed Rule, and 30 days following issuance of the Final Rule.
Inflation Adjustment
The Department did not change the inflation adjustment methodology. To ensure that the rate keeps pace with the cost of
living, the Final Rule provides for inflation adjustments to the minimum pay rate on April 1 of every year. DCWP chose
the Consumer Price Index for Urban Wage Earners and Clerical Workers for the New York-New Jersey-Pennsylvania
metropolitan area as the most appropriate index to capture changes in NYC delivery workers’ cost of living.
Comment:
Apps reincorporated prior comments to the First and Second Proposed Rules, proposing no inflation adjustment or an
inflation adjustment once every five years.
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Response:
For the reasons stated previously (Report at 32-33, Second Proposed Rule at 12-13), the Department did not adopt this
recommendation.
Coverage
The Department made no changes to which entities or types of trips are covered by the minimum pay rule. The Final Rule
applies to the deliveries food delivery workers perform for third-party food delivery services or third-party courier
services, as defined in Subchapter 1 of Chapter 15 of Title 20.
Comment:
Grubhub commented that the minimum pay rule should apply to all delivery companies, not only food delivery services. It
contends that the minimum pay rule should apply to quick convenience and grocery delivery companies.
Response:
The Department cannot adopt Grubhub’s recommendation because it is outside the scope of the Department’s authority
granted by Local Law 115 of 2021.
Comment:
DoorDash requested that the Department exempt trips its food delivery workers make from businesses other than food
Preview
FILED: NEW YORK COUNTY CLERK 07/06/2023 10:16 AM INDEX NO. 155943/2023 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 07/06/2023 Exhibit 2 FILED: NEW YORK COUNTY CLERK 07/06/2023 10:16 AM INDEX NO. 155943/2023 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 07/06/2023 New York City Department of Consumer and Worker Protection Notice of Adoption of Final Rule Pursuant to the authority vested in the Department of Consumer and Worker Protection (“DCWP” or “Department”) by Sections 1043 and 2203(f) of the New York City Charter and Sections 20-1507(c) and 20-1522(a)(3) of the New York City Administrative Code, and in accordance with the requirements of Section 1043 of the Charter, the Department amends Subchapter H of Chapter 7 of Title 6 of the Rules of the City of New York. Statement of Basis and Purpose of Final Rule The Department of Consumer and Worker Protection (“DCWP” or “Department”) adopts 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 pay protections for food delivery workers who work for apps as independent contractors. The legislative record indicates that these workers face 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”). 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 discuss 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 describes the First Proposed Rule. (Report at 27-33). Section 6 of the Report models the impacts of the First Proposed Rule on food delivery workers, apps, restaurants, and consumers. (Report at 34-36). The First Proposed Rule proposed the following amendments: Section 7-801 to add definitions of “on-call time,” “pay period,” and “trip time”; Section 7-805 to add the recordkeeping and reporting obligations for a third-party food delivery service or third- party courier service; Section 7-806 to clarify what constitutes “required” travel across a bridge or through a tunnel; Section 7-807 to establish that compensation must be calculated for each pay period; and Section 7-810 to set the minimum pay rate and method requiring apps to pay each worker for their trip time and to pay all workers, in the aggregate, for their combined on-call time using a methodology of their choosing. 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, consumers, and members of the public, among others. Second Proposed Rule. After considering the comments received, the Department published a Second Proposed Rule on March 7, 2023, which reflected the following changes from the First Proposed Rule: 1 FILED: NEW YORK COUNTY CLERK 07/06/2023 10:16 AM INDEX NO. 155943/2023 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 07/06/2023 Section 7-801 added definitions of “cancellation,” “cancelled,” “internal identifier,” and “utilization rate”; Section 7-805 narrowed the scope of apps’ reporting obligations and added 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 adjusted apps’ disclosure requirements to reflect changes to the minimum pay rate; Section 7-810 adjusted the minimum pay rate to reflect “multi-apping” and to incorporate additional inflation data; renamed the minimum pay method set forth in the First Proposed Rule “the standard method”; added an alternative method for determining minimum pay; adjusted the effective date of implementation; and adjusted the phase-in schedule for the minimum pay rate; and The Second Proposed Rule also corrected minor typographical errors in the First Proposed Rule and made technical corrections to clarify certain text. The Second Proposed Rule was the subject of a public hearing held on April 7, 2023. The Department received comments on the Second 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, consumers, and members of the public, among others. Final Rule. After considering the comments received, this Final Rule adopts the Second Proposed Rule, with the following adjustments: Provides for a limited “safe harbor” to the low-utilization floor required under the Alternative Method. Provides for review of certain aspects of the rule based on updated data in the report due on September 24, 2024. Table 1 summarizes the calculations the Department performed to develop the minimum pay rate under both the Final Rule and the Second Proposed Rule. Table 1. Minimum Pay Rate Calculations Under the Final Rule ($) Base Pay Pay for Wages and Time Off 18.12 Base Pay Subtotal ($19.62), less Adjustment for Medicare and Social Security Contributions ($1.50) Adjustment for Medicare and Social Security Contributions 1.50 Base Pay Subtotal ($19.62) x employer share of Medicare and Social Security contributions (7.65%) Base Pay Subtotal 19.62 Workers’ Compensation Workers’ Compensation if App Delivery Workers were Employees 1.42 Pay for Wages and Time Off x expected costs (7.84%) Adjustment for Medicare and Social Security Contributions 0.26 Workers’ Compensation Subtotal, less the employer and employee shares of Medicare and Social Security contributions ($1.68 x 15.3%). (Report at 30-31). 2 FILED: NEW YORK COUNTY CLERK 07/06/2023 10:16 AM INDEX NO. 155943/2023 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 07/06/2023 Workers’ Compensation Subtotal 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 ($1.42) Expense Component Average Hourly Expenses of E-Bike Workers 2.26 See Report at 18-20, 30-31. Total Component Subtotals 23.56 Sum of Base Pay Subtotal, Workers’ Compensation Subtotal, and Average Hourly Expenses of E-Bike Workers -3.60 Adjustment for Multi-Apping Component Subtotal x multi-apping adjustment factor [1 – 0.8471] Adjusted Total 19.96 Sum of Subtotal and Adjustment for Multi-Apping Notes: Adapted from the Report (at 31). As in the Second Proposed Rule, the minimum pay rate in the Final Rule phases-in over three years. Table 2 summarizes the phase-in schedule under the Final Rule. Table 2. Minimum Pay Rate Under the Final Rule, 2023-2025 ($) 2023 17.96 April 1, 2024 18.96 April 1, 2025 19.96 Notes: April 1, 2024 and April 1, 2025 values shown are prior to inflation adjustment. In the Final Rule, the 2023 rate takes effect 30 days after adoption. The following sections summarize the Department’s deliberations on comments received from the public on the Second Proposed Rule. Many public comments on the Second Proposed Rule restate the substance of comments offered on the First Proposed Rule. For purposes of brevity, the Department incorporates by reference all prior pertinent responses to comments on the First Proposed Rule and focuses this Statement of Basis and Purpose on new issues raised in comments on the Second Proposed Rule. Methods for Determining Minimum Pay 3 FILED: NEW YORK COUNTY CLERK 07/06/2023 10:16 AM INDEX NO. 155943/2023 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 07/06/2023 The Final Rule retains the two methods for calculating compensation to workers described in the Second Proposed Rule (the Standard Method and the Alternative Method), with one adjustment. Specifically, the Final Rule adopts a modified version of DoorDash’s proposal for a “safe harbor” to the low-utilization floor under the Alternative 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. 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%. The 60% figure reflects the average “utilization rate” of apps that pay per trip. An app’s utilization rate is the amount of “trip time” workers engage in for the app, divided by their workers’ total time connected to that app, including both “trip time” and “on-call time.” “Trip time” is the time between acceptance of a trip offer and its completion or cancellation and “on-call time” is the time in which a worker is connected to an app in a status where they can receive or accept trip offers, excluding “trip time.” Under the Alternative 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. An app may choose the Alternative Method or the Standard Method, provided that on or after April 1, 2024, an app may only choose the Alternative Method for a pay period if it has a utilization rate above 53%, with limited exceptions. The incorporation of a low-utilization floor of 53% ensures that workers who are only paid for trip time have adequate opportunities to pick up trips to earn income and do not spend excessive time on-call waiting for trip offers. In the Second Proposed Rule, there was no exception to the 53% requirement. In the Final Rule, on or after April 1, 2024, an app may still use the Alternative Method despite having a utilization rate below 53% in up to two pay periods per year. For all other pay periods starting on or after April 1, 2024, the 53% low-utilization floor applies. For purposes of this exception, a year begins with the first pay period that begins on or after April 1 of a calendar year and ends with the last pay period that begins on or before March 31 of the following calendar year. The Alternative Method implements the method of payment proposed by Uber Eats, DoorDash, and Grubhub in their comments to the First Proposed Rule, with some modification. The change to the low-utilization floor in the Final Rule implements DoorDash’s proposal in its comment to the Second Proposed Rule. Under both the Standard Method and Alternative Method apps assume financial responsibility for time that workers spend working, including all trip time and on-call time. In the Standard Method, this result is achieved because apps must pay for all trip time and aggregate on-call time. In the Alternative Method, the incorporation of a utilization rate of 60% ensures that workers are paid a rate for trip time that indirectly compensates them for uncompensated on-call time. The two methods accommodate the variety of pay arrangements already present in the industry. Comment: Comments from Uber Eats, Grubhub, and DoorDash stated that the alternative minimum pay rate should be lowered to only account for a subset of delivery workers’ on-call time. Uber Eats recommended calculating the alternative minimum pay rate using an 87% utilization rate, and Grubhub and DoorDash recommended using a 1.156 multiplier; each of these calculations produces approximately the same result. The apps argued that their recommendations appropriately exclude on-call time that precedes a rejected or expired trip offer and time between completing a trip and logging off the app. Uber Eats commented that its recommendation was based on analysis of its own data. Grubhub and DoorDash commented that their recommendation was derived from data published by the Department. Uber Eats, Grubhub, and DoorDash also reiterated similar comments in opposition to the compensation of on-call time in the Standard Method, which were first submitted in response to the First Proposed Rule. 4 FILED: NEW YORK COUNTY CLERK 07/06/2023 10:16 AM INDEX NO. 155943/2023 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 07/06/2023 Response: The Department is not adopting the apps’ recommendation to exclude certain portions of on-call time from the utilization rate calculation, which would reduce the alternative minimum pay rate and workers’ incomes. The Department previously discussed its rationale for compensating all on-call time under the Standard Method. (Report at 32; Second Proposed Rule at 12). The Department’s reasoning applies equally to treatment of on-call time under the Alternative Method. The Department is required to set the minimum pay rate based on the results of its study, which must consider delivery workers’ hours, and is further required to establish the minimum pay rate in consideration of “the on-call and work hours of food delivery workers.” NYC Admin. Code § 20-1522(a)(3). For these reasons, it would not be appropriate to exclude portions of workers’ on-call time from the alternative minimum pay rate calculation. The study did not identify any basis for departing from the precedent set by the NYC Taxi and Limousine Commission’s (TLC) minimum pay rule in compensating all on-call time, including time workers spend waiting for offers they find acceptable and for offers they find unacceptable. Like for-hire vehicle drivers, the ongoing assessment of trip offers is intrinsic to work on the apps and fundamental to how workers manage the earnings uncertainty created by apps’ business model. Further, the apps’ suggestions to use a 1.156 multiplier or 87% utilization rate are arbitrary and not based on the results of the study, which found that on-call time represents 24 out of every 60 minutes workers log on the apps. In setting the minimum pay rate, the Department is also required to consider, among other factors, “the adequacy of food delivery worker income considered in relation to trip-related expenses.” NYC Admin. Code § 20-1522(a)(3). The apps’ proposed multiplier results in inadequate food delivery worker income when considered in relation to their expenses. The Department estimates that the alternative minimum pay rate based on a 1.156 multiplier proposed by apps would provide delivery workers with $16.34 per hour worked, or $13.52 after accounting for expenses. (Table 3). By comparison, for- hire vehicle drivers covered by the TLC’s minimum pay rule receive $19.62 per hour, not including the expense component of their pay, and receive coverage for work-related injuries through the Black Car Fund. (Second Proposed Rule at 5-7). If apps classified delivery workers as employees, the minimum pay and benefit requirements would be worth $23.21 per hour by 2025. (Table 5). Table 3. Analysis of Delivery Worker Pay per Hour Worked Under an Alternative Minimum Pay Rate Based on a 1.156 Multiplier ($) Minimum Pay Rate 19.96 Alternative Minimum Pay Rate 23.07 Minimum Pay Rate (19.96) x Multiplier (1.156) Pay per Hour Worked Alternative minimum pay rate ($23.07) x Utilization rate (0.60) ÷ Multi-apping Adjustment Factor 16.34 (0.8471) Pay per Hour Worked, Less Expenses Pay per hour worked ($16.34), less expenses ($2.82) 13.52 Notes: Projection is for 2025. Expenses are as described in the Report (at 18, 34). Comment: 5 FILED: NEW YORK COUNTY CLERK 07/06/2023 10:16 AM INDEX NO. 155943/2023 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 07/06/2023 Uber Eats raised several objections to the Department’s use of a 60% utilization rate to calculate the alternative minimum pay rate, in addition to the objections discussed above related to on-call time. Uber Eats asserted that the Department did not adequately explain: why the Department used data from the period January 1, 2021 through June 30, 2022 to obtain the 60% rate, as opposed to reliance on more recent data; what utilization rates the Department would have obtained had it calculated the utilization rate over other periods; and how the Department calculated average utilization. It also objected to the Department’s decision to exclude Relay from the dataset it used to obtain the 60% utilization rate and proposed instead that the alternative minimum pay rate reflect only Relay’s data and exclude data from all other apps. Finally, it asserted that the utilization rates exhibited by apps prior to implementation of the minimum pay rule are irrelevant for purposes of calculating the alternative minimum pay rate. Response: The Department used the weekly aggregate data provided by Uber Eats, Grubhub, and DoorDash to calculate their combined utilization for each week from January 1, 2021 through June 30, 2022, as follows: 𝑇𝑜𝑡𝑎𝑙 𝑡𝑟𝑖𝑝 𝑡𝑖𝑚𝑒 𝑈𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑟𝑎𝑡𝑒 = (eq.1) (𝑇𝑜𝑡𝑎𝑙 𝑡𝑟𝑖𝑝 𝑡𝑖𝑚𝑒 + 𝑇𝑜𝑡𝑎𝑙 𝑜𝑛-call 𝑡𝑖𝑚𝑒) The Department then obtained the utilization rate used in the alternative minimum pay rate by taking the mean of the weekly utilization rates calculated as above. The Department used data from the period January 1, 2021 through June 30, 2022 because this is the data the apps provided in response to the Department’s subpoenas in connection with the statutorily-required study. Utilization trended down during this period. The combined weekly utilization rates for Uber Eats, Grubhub, and DoorDash during this period are available on DCWP’s website. A quarterly summary is available below. (Table 4). Table 4. Average Combined Weekly Utilization Rates for Uber Eats, Grubhub, and DoorDash, 2021 Q1 – 2022 Q2 Quarter Utilization Rate 2021 Q1 68% 2021 Q2 65% 2021 Q3 59% 2021 Q4 57% 2022 Q1 57% 2022 Q2 52% Notes: Department analysis of weekly aggregate data obtained from apps. The Department is not incorporating Uber Eats’s recommendations to include data from Relay in the utilization rate calculation or to exclude data from other apps. The Department introduced the Alternative Method in response to requests by Uber Eats, Grubhub, and DoorDash to better accommodate their existing operating models, which involve high levels of on-call time. Therefore, basing the Alternative Method’s utilization rate and corresponding low-utilization floor on these apps’ past experience is appropriate. In contrast, Relay has a model in which it pays workers for all trip time and on- call time and achieves a high utilization rate, and this model is best accommodated by the Standard Method. Had the Department based the Alternative Method’s utilization rate and corresponding low-utilization floor on Relay’s past experience, both would be higher, and less reflective of the operating models the Alternative Method seeks to accommodate. If Uber Eats, Grubhub, or DoorDash wish to change their operating models and instead pursue higher utilization, they may do so under the Standard Method, and so a change to the Alternative Method is not necessary. To the extent Uber Eats’ comment implies that the Department should calculate the alternative minimum pay rate consistent with 6 FILED: NEW YORK COUNTY CLERK 07/06/2023 10:16 AM INDEX NO. 155943/2023 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 07/06/2023 high utilization while still permitting apps to operate with low utilization, this would result in inadequate pay per hour worked, and so the Department is not incorporating this suggestion. The Department will monitor apps’ utilization rates when the Final Rule is in effect. If utilization changes, the Department will consider whether a corresponding change is warranted. Comment: Uber Eats and DoorDash expressed concern that requiring apps that use the Alternative Method to pay workers according to the Standard Method if they fall below the 53% utilization floor in a pay period is unduly punitive and administratively burdensome. Both apps recommended that instead of requiring apps to increase worker pay to the Standard Method to account for excessive on-call time, the rule should require an app that falls below the 53% utilization floor to suspend giving new workers access to the app’s platform until the 53% floor is achieved. Uber Eats contended that apps using the Alternative Method should be permitted to account for utilization volatility by calculating it on a monthly basis, instead of each pay period, and make retroactive payments to workers pursuant to the Standard Method only if average utilization over the month falls below 53%. Uber Eats also asked for clarification about how an app can account for multi-apping when determining whether it meets the 53% utilization floor. DoorDash suggested that the Department incorporate a “safe harbor” whereby a platform using the Alternative Method would be required to pay workers in accordance with the Standard Method only if it fell below the 53% utilization floor on four or more weeks during a calendar year. Uber Eats requested clarification of the calculations the Department performed to obtain the 53% low-utilization floor. Response: The Department calculated the low-utilization floor by measuring the standard deviation of weekly utilization rates for Uber Eats, Grubhub, and DoorDash separately from January 1, 2021 to June 30, 2022. The Department then determined that, among these three apps, the app with the median volatility had a standard deviation of 7% in its weekly utilization rates. As previously explained, the alternative minimum pay rate is designed around expected average utilization of 60%. Seven percent less than 60% is 53%. Setting the low-utilization floor at this level should lead apps to maintain average utilization rates around 60% and provide for greater consistency in utilization rates than they have previously, while still allowing for some natural variation week to week. The Department disagrees that the 53% utilization floor is punitive or administratively burdensome. The utilization floor is not punitive and ensures that workers’ pay is not less than intended when averaged across all work time. Further, apps can measure their utilization rates with data they are already capturing routinely. Application of the Standard Method is not administratively burdensome, as an app can comply by paying workers a straight hourly rate for all work time, among other practical formulas that would be consistent with the Standard Method. The Department is not incorporating Uber Eats and DoorDash’s recommendation to require an app that falls below the 53% utilization floor to suspend giving new workers access to the app’s platform until the 53% floor is achieved. Such specific regulation of labor usage is not necessary. Apps have flexibility to manage their own labor needs and costs within the Final Rule framework and may choose to self-impose restrictions on platform access if they wish. The Department is not adopting Uber Eats’ recommendation to allow apps to calculate their utilization rates on a monthly, rather than weekly, basis. Application of the low utilization floor on a weekly basis ensures that workers are paid what 7 FILED: NEW YORK COUNTY CLERK 07/06/2023 10:16 AM INDEX NO. 155943/2023 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 07/06/2023 they are owed in a timely manner. In response to Uber Eats’ request for clarification, the Department confirms that each app is required to measure its own utilization rate. The Final Rule, like the Second Proposed Rule, accounts for multi- apping by factoring it into the minimum pay rate, not into the measurement of the utilization rate. The Department is, however, adopting a modified version of the “safe harbor” proposed by DoorDash. Under the Final Rule, apps are allowed to use the Alternative Method on the first two pay periods that they have utilization below 53% in any year (measured between April 1 and March 31), but for the remainder of the year may not use the Alternative Method for any pay periods in which their utilization is below 53%. This relaxation of the low utilization floor provides apps with additional room to accommodate occasional unexpected volatility without undermining the purpose of the low utilization floor. Comment: Some commenters, including elected officials, workers, and worker advocacy groups contended that delivery workers should be paid for their individual on-call time, and that apps should not be permitted to choose which workers they pay for all aggregate on-call time using the Standard Method. 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. Accordingly, these commenters recommended that the Standard Method be converted to an hourly rate that applies to each individual worker’s combined trip time and on-call time. Response: The Department is not incorporating this recommendation. The Department acknowledges the earnings certainty that an hourly rate for each individual’s combined trip time and on-call time would provide. However, the Standard Method’s aggregate payment requirement ensures appropriate average pay among the workforce as a whole for on-call time and affords each app flexibility to make aggregate payments using a methodology of its choosing. The Department ultimately determined that the benefits of affording apps this flexibility outweighed the benefits of a rule that would require apps to pay each worker for their individual on-call time. Base Pay Component The Department made no changes to the base pay component of the minimum pay rate in the Final Rule. Comment: Comments from some workers, worker advocates, elected officials, and academic researchers reiterated prior comments in support of a base pay component that significantly increases worker pay relative to the status quo, noting that as independent contractors these workers do not receive a minimum wage or other employee benefits. DoorDash, Uber Eats, Grubhub, Relay, and tech industry advocates reiterated prior comments that the base pay component of the rate should be reduced to factor in workers’ tip earnings or should be based on the hourly pay of tipped workers. Response: The Department did not make changes to the base pay component, which provides for parity with high-volume for-hire vehicle drivers covered by the TLC’s minimum payment rate. The Department’s rationale for the base pay component is the same as in the Second Proposed Rule. (Second Proposed Rule at 4-5). The Department did not incorporate the apps’ 8 FILED: NEW YORK COUNTY CLERK 07/06/2023 10:16 AM INDEX NO. 155943/2023 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 07/06/2023 recommendation to reduce the base pay component or match it to the hourly rate for tipped workers, for reasons discussed previously. (Second Proposed Rule at 5). Workers’ Compensation Component The Department made no changes to its method for calculating the workers’ compensation component of the rate in the Final Rule. Comment: Comments from Uber Eats, DoorDash, tech industry advocates, and business advocates reiterated previous recommendations that the Department eliminate the workers’ compensation component because it would not actually be used to purchase workers’ compensation coverage. Response: For the reasons stated previously (Report at 30, Second Proposed Rule at 6), the Department did not adopt this recommendation and is maintaining the workers’ compensation component. Expense Component The Department made no changes to the $2.26 expense component of the rate in the Final 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). As in the Second Proposed Rule, the expense component of $2.26 is DCWP’s estimate of average hourly expenses for 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. The expense component includes both phone-related and e- bike-related expenses. (Report at 30). Comment: Elected officials and worker advocates reiterated prior comments that the Department should annually review worker expenses and incorporate car expenses into the minimum pay rate. Some of these commenters also suggested adjusting expenses annually using a price index specific to transportation and setting the expense component above the level measured in the Department’s study because present expenses are unduly low due to workers’ low incomes. Response: For the reasons stated previously (Report at 31, Second Proposed Rule at 10), the Department did not adopt the recommendation to incorporate car drivers’ higher expenses into the minimum pay rate. With respect to comments regarding changes in expenses over time, in the Second Proposed Rule the Department noted that, along with other factors, regulation of e-bikes and batteries may change in ways that affect worker expenses. (Second Proposed Rule at 9). Since publication of the Second Proposed Rule, NYC enacted Local Law 39 of 2023, which prohibits sale of electric bikes and batteries that do not meet certain safety certification standards. The Department plans to monitor the potential impact of the new law on the costs of acquiring legal e-bikes and batteries within NYC, and to that end, has added a new subsection 7-810(j) to the Final Rule. Subsection 7-810(j) requires the Department to review the expense component of the minimum pay rate for the report required by Section 20-1522(d) of the Administrative Code on or 9 FILED: NEW YORK COUNTY CLERK 07/06/2023 10:16 AM INDEX NO. 155943/2023 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 07/06/2023 before September 24, 2024 (“the 2024 Report”). The Department may revise the expense component in future rulemaking, if warranted. Multi-Apping Adjustment The Department made no changes in the Final Rule to the multi-apping adjustment. The Department 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. As described in the Second Proposed Rule (at 10), the Alternative Method may result in workers continuing to spend an average of 17.7% of their combined trip time and on-call time logged into multiple apps simultaneously, and so a multi-apping adjustment based on this rate is appropriate. The 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 Final 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 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 = 0.8471. x 0.177) 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. Comment: Several commenters, including the Comptroller, other elected officials, worker advocacy groups, and academic researchers recommended that DCWP eliminate the multi-apping adjustment. These commenters stated that the multi- apping adjustment inappropriately lowers the minimum pay rate, that multi-apping is a “canard” fabricated by the apps, and/or to the extent multi-apping does occur, it does not justify lowering the minimum pay rate. Some of these commenters also stated that the TLC minimum pay rule does not include a reduction for multi-apping for for-hire vehicle drivers. Apps’ comments expressed a need for a multi-apping adjustment because the Standard Method and Alternative Method both require apps to compensate workers for on-call time, directly or indirectly. These commenters noted that some on- call time occurs when workers are performing deliveries for one app while on-call for a second app. In their view, overlapping periods of work time should not be compensated by multiple apps. Response: After considering all comments, DCWP determined that the multi-apping adjustment is appropriate. Workers are connected to more than one app for 17.7% of their on-call and trip time, and the addition of the Alternative Method means that apps have less incentive to increase their utilization rates and thereby decrease multi-apping. However, as Uber Eats noted in its comment, apps may react to the implementation of the minimum pay rate by increasing utilization rates. If this occurs, rates of multi-apping may decrease in the future. The Department will monitor rates of multi-apping after the Final Rule is in effect using records the apps are required to provide to the Department, including worker taxpayer identification 10 FILED: NEW YORK COUNTY CLERK 07/06/2023 10:16 AM INDEX NO. 155943/2023 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 07/06/2023 number, which will allow the Department to track multi-apping on the individual level from app to app. In the Final Rule, the Department is required to review the multi-apping adjustment for the 2024 Report and may revise the multi-apping adjustment in future rulemaking, if warranted. Commenters who asserted that the TLC minimum pay rule does not account for multi-apping are mistaken. The TLC’s minimum pay rule does account for multi-apping, though the mechanics differ from the Department’s minimum pay rule. To obtain its trip time rate, the TLC divides its minimum pay rate by a measure of utilization that reflects multi-apping, 35 R.C.N.Y. § 59D-03(j), whereas the Department divides its minimum pay rate by a measure of utilization that does not reflect multi-apping. Then, the Department applies a multi-apping adjustment to the minimum pay rate. For parity with the TLC rate, a multi-apping adjustment is appropriate. Phase-in The Department made no changes to the phase-in of the minimum pay rate in the Final Rule. The minimum pay rate in the Final Rule phases in at 90% of the full rate in 2023, 95% starting April 1, 2024, and 100% starting April 1, 2025. These rates are $17.96 in 2023, $18.96 in 2024, and $19.96 in 2025. The rates in 2024 and 2025 are also subject to adjustment for inflation. Comment: Several commenters, including elected officials, workers, worker advocates, and academic researchers contended that DCWP should eliminate the phase-in for the minimum pay rate. These commenters state that the phase-in will result in workers being paid a $12.69 subminimum hourly wage in 2023. Response: The Department disagrees with the assertion that the Final Rule provides for a $12.69 hourly rate. Table 5 presents the Department’s calculation of the minimum pay rate during the phase-in period and a comparison to what the minimum wage and benefit requirements would be if the apps were to classify their delivery workers as employees. Table 5. Comparison of Delivery Worker Pay under the Final Rule with the Pay and Benefit Requirements that would apply if Apps Classified Delivery Workers as Employees, 2023-2025 ($) Delivery Worker Pay under the Final Pay and Benefit Requirements that Rule would apply if Apps Classified Delivery Workers as Employees 2023 2024 2025 2023 2024 2025 Pay and Benefits 21.20 22.38 23.56 21.09 22.50 23.21 Expenses (-) 2.98 2.90 2.82 0.00 0.00 0.00 Net Pay 18.22 19.48 20.74 21.09 22.50 23.21 Notes: For delivery workers covered under the Final Rule, pay and benefits are expressed per hour worked, after accounting for multi-apping. The 2024 and 2025 minimum pay rates in the Final Rule are subject to inflation adjustment. Expenses are assumed to decrease in equal increments from $3.06 per hour in 2022 (Report at 18) to $2.82 in 2025, due to decreased use of cars for delivery (Report at 34). The minimum wage applicable to employees is $15.00 in 2023, $16.00 in 2024, and $16.50 in 2025. The Department assumes employee health insurance costs per hour will remain 11 FILED: NEW YORK COUNTY CLERK 07/06/2023 10:16 AM INDEX NO. 155943/2023 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 07/06/2023 constant between 2023 and 2025 as a percentage of payroll. All other employee pay and benefit calculations are as published previously. (Report at 22). Comment: Other commenters, including Uber Eats and Doordash, contended that DCWP should adopt a phase-in schedule similar to the First Proposed Rule, which was 75% in 2023, 85% in 2024, and 100% in 2025, to give apps time to adjust to increased costs. Response: The Department is not adopting this recommendation. As stated previously, the Department agrees with commenters to the First Proposed Rule that this phase-in provides for pay in 2023 and 2024 that would provide for inadequate worker income in relation to workers’ trip-related expenses, which would fail to meet the commands of Local Law 115. (Second Proposed Rule at 13). Table 6 compares the apps’ proposed phase-in to what the minimum wage and benefit requirements would be if the apps were to classify their delivery workers as employees. Table 6. Comparison of Delivery Worker Pay under Apps’ Proposed Phase-In with the Pay and Benefit Requirements that Would Apply if Apps Classified Delivery Workers as Employees, 2023-2025 Pay and Benefit Requirements that Delivery Worker Pay under Apps’ would apply if Apps Classified Proposed Phase-in Delivery Workers as Employees 2023 2024 2025 2023 2024 2025 Pay and Benefits 17.67 20.02 23.56 21.09 22.50 23.21 Expenses (-) 2.98 2.90 2.82 0.00 0.00 0.00 Net Pay 14.69 17.12 20.74 21.09 22.50 23.21 Notes: Methods are as described in Table 5. The Department also notes that apps have had ample time to plan and adjust in advance of the effective date of the rule. By the rule’s effective date, it will have been 21 months since the enactment of the Local Law, eight months since the First Proposed Rule, four months since the Second Proposed Rule, and 30 days following issuance of the Final Rule. Inflation Adjustment The Department did not change the inflation adjustment methodology. To ensure that the rate keeps pace with the cost of living, the Final Rule provides for inflation adjustments to the minimum pay rate on April 1 of every year. DCWP chose the Consumer Price Index for Urban Wage Earners and Clerical Workers for the New York-New Jersey-Pennsylvania metropolitan area as the most appropriate index to capture changes in NYC delivery workers’ cost of living. Comment: Apps reincorporated prior comments to the First and Second Proposed Rules, proposing no inflation adjustment or an inflation adjustment once every five years. 12 FILED: NEW YORK COUNTY CLERK 07/06/2023 10:16 AM INDEX NO. 155943/2023 NYSCEF DOC. NO. 4 RECEIVED NYSCEF: 07/06/2023 Response: For the reasons stated previously (Report at 32-33, Second Proposed Rule at 12-13), the Department did not adopt this recommendation. Coverage The Department made no changes to which entities or types of trips are covered by the minimum pay rule. The Final Rule applies to the deliveries food delivery workers perform for third-party food delivery services or third-party courier services, as defined in Subchapter 1 of Chapter 15 of Title 20. Comment: Grubhub commented that the minimum pay rule should apply to all delivery companies, not only food delivery services. It contends that the minimum pay rule should apply to quick convenience and grocery delivery companies. Response: The Department cannot adopt Grubhub’s recommendation because it is outside the scope of the Department’s authority granted by Local Law 115 of 2021. Comment: DoorDash requested that the Department exempt trips its food delivery workers make from businesses other than food