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ADMINISTRATIVE RECORD
TABLE OF CONTENTS
Page
Volume 1 (R. 1-4932): Report and Rulemaking Materials
A Minimum Pay Rate for App-Based Delivery Workers in NYC (“DCWP Report”) 1-43
June 15, 2021 Hearing Comments 44-144
June 15, 2021 Hearing Transcript 145-277
First Proposed Rule Statement of Basis and Purpose (“First SBP”) 278-291
First Proposed Rule Comments 292-2080
First Proposed Rule Hearing Transcript 2081-2162
Second Proposed Rule Statement of Basis and Purpose (“Second SBP”) 2163-2190
Second Proposed Rule Comments 2191-4734
Second Proposed Rule Hearing Transcript 4735-4898
Final Rule Notice of Adoption (“Final Rule SBP”) 4899-4932
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A Minimum
Pay Rate for
App-Based
Restaurant
Delivery
Workers
in NYC
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© November 2022. New York City Department of Consumer and Worker Protection. All rights reserved.
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Acknowledgments
The Department of Consumer and Worker Protection (the Department) acknowledges the following staff who
contributed to this report: Marlee Belford, Matt Bondy, John De Vito, Anastasia Eriksson, Maria Jennings, Sam
Krinsky, Elizabeth Major, Bryan Menegazzo, Maria Milosh, Alex Moran, Michael Papadopoulos, David Rauch,
Michael Tiger, and Elizabeth Wagoner.
The Department also collaborated with several partners and contractors. James Parrott, Ph.D., Director of
Economic and Fiscal Policy for the Center for New York City Affairs at the New School, worked with the
Department on an analysis of existing wage and benefit standards in NYC. Suresh Naidu, Ph.D., Professor of
Economics and International and Public Affairs at Columbia University, worked with the Department in studying
the effects of the proposed rule. Professor Adam Reich, Ph.D., and Patrick Youngblood of Columbia University,
Andrew Wolf, Ph.D., of Rutgers University and the City University of New York (CUNY), Kate Sargent, Jen
Roberton, Moriah Richardson, and Dorottya Miketa of Sam Schwartz Engineering, and Hildalyn Colón
Hernández and Ligia Guallpa of the Worker's Justice Project, with the Department, developed and
implemented a field survey of delivery worker expenses and working conditions. This survey was supported, in
part, through funding from the Open Society Foundations and the Ford Foundation. Sherry Baron, M.D.,
M.P.H., Professor at the Barry Commoner Center for Health and the Environment and the Urban Studies
Department, Queens College, CUNY, contributed to the Department’s analysis of delivery workers’
occupational injuries. Steven Picker of the Food and Beverage Industry Partnership at the NYC Department of
Small Business Services (SBS), Andrew Rigie of the NYC Hospitality Alliance, and Kevin Dugan of the New
York State Restaurant Association, with their colleagues, contributed to the Department’s survey of restaurant
operators and distributed the survey questionnaire. Rodney Stiles, formerly of the NYC Taxi and Limousine
Commission (TLC), Kerem Levitas of the City of Seattle Office of Labor Standards, and Erica Groshen, Ph.D.,
Senior Economics Advisor at the Institute for Labor Relations at Cornell University, provided advice and
consultation. Julia Kite-Laidlaw, William Carry, and colleagues of the NYC Department of Transportation (NYC
DOT), Fabricio Caro and Nicole Simmons of the Fire Department of the City of New York (FDNY), and
Charlene Obernauer and Lara Maldjian of the New York Committee for Occupational Safety and Health
(NYCOSH) provided insights into the safety and health concerns relating to app delivery. Do Jun Lee, Ph.D.,
Assistant Professor at the Urban Studies Department, Queens College, CUNY, and Jing Wang, Adjunct
Assistant Professor at Brooklyn College and the College of Staten Island, CUNY, advised on the experiences
of Chinese delivery workers in NYC. Ryan Wanttaja and James DiGiovanni of TLC shared their experiences
implementing NYC’s minimum earnings standard for app for-hire service drivers. James Parrott, Suresh Naidu,
Sherry Baron, Rodney Stiles, and Kate Sargent, with her colleagues at Sam Schwartz Engineering, also
reviewed and commented on drafts of this report.
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Abstract
In this report, the Department discusses the findings of its study into the working conditions of restaurant
delivery workers who are engaged by apps as independent contractors in NYC. This report includes an
analysis of the pay and working conditions of this workforce, describes the Department’s proposed rule to
establish a minimum pay rate for this work, and examines the minimum pay rate’s anticipated impacts on apps,
consumers, restaurants, and workers.
The Department’s analysis is based principally on data obtained from apps and an online survey distributed to
123,000 workers who performed deliveries in NYC in the fourth quarter of 2021. The Department supplemented
these sources with an online survey distributed to all restaurants in NYC, an in-person field survey of more than
400 delivery workers, testimony from a public hearing, interviews with stakeholders and other experts, and
analysis of publicly available data on pay, benefits, and safety conditions.
The Department’s study finds that NYC’s app-based restaurant delivery workers currently earn $14.18 per hour
with tips and $7.09 per hour without tips. Delivery workers’ hourly expenses are $3.06, reducing their take
home pay to $11.12 per hour with tips and $4.03 per hour without tips. The Department also finds that app-
based restaurant delivery workers experience high rates of occupational injury.
The rate set forth in the proposed rule, after a two-year phase-in, would require restaurant apps to pay delivery
workers who are engaged as independent contractors an average hourly rate of $23.82 per hour excluding tips,
which is comprised of a $19.86 base rate, $1.70 to compensate for the absence of workers’ compensation
insurance, and $2.26 to reflect workers’ expenses. Pay at this rate will provide for parity with workers covered
by NYC’s existing minimum earnings standard for app for-hire service drivers and approximates the total
compensation app-based restaurant delivery workers would receive if classified as employees.
The Department’s study projects that the minimum pay rate will encourage apps to use workers’ time more
efficiently, increasing deliveries from 1.6 to 2.5 per hour. Apps may choose to pass their remaining increase in
labor costs to consumers through higher fees, increasing consumers’ cost of delivery by $5.18 per order, on
average. Though higher fees will moderate growth, the Department projects that the number of app deliveries
will still increase by 35% by 2025. The Department also projects that restaurants will be mostly unaffected by
the minimum pay rate but may see a modest increase in profits if consumers respond to higher app fees by
purchasing directly from restaurants.
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Table of Contents
1 Introduction ................................................................................................................................................... 1
2 Sources and Methods ................................................................................................................................... 2
3 Overview of the Apps, Consumers, and Restaurants ................................................................................... 6
4 Delivery Workers’ Pay and Working Conditions ......................................................................................... 12
5 Design of the Minimum Payment Standard ................................................................................................ 27
6 Effects of the Minimum Payment Standard................................................................................................. 34
7 Conclusion .................................................................................................................................................. 37
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1 Introduction
Section 20-1522 of the NYC Administrative Code requires the Department of Consumer and Worker Protection
(the Department) to study the pay and working conditions of app-based restaurant delivery workers and, no
later than January 1, 2023, establish a minimum pay rate for their work by rule. 1 Referenced herein as the
Minimum Pay Law, this section was enacted in fall 2021 as part of a broader package of protections for app-
based restaurant delivery workers in NYC, known as the Delivery Worker Laws. 2 This report refers to the app-
based restaurant delivery workers who are covered by the Delivery Worker Laws as “app delivery workers.” A
related package of laws, also enacted in fall 2021, requires most apps to obtain a license to operate in NYC
and regulates their interactions with restaurants and consumers, including setting a limit on the fees that apps
can charge restaurants. 3
This report summarizes the results of the Department’s study of the restaurant delivery app industry in NYC,
discusses the Department’s proposed minimum pay rate, and examines the minimum pay rate’s prospective
impact on apps, consumers, workers, and restaurants. Concurrently with release of this report, the Department
is publishing the proposed rule establishing the minimum pay rate in the New York City Record.
Throughout this report, the Department refers to “apps,” “app delivery,” and “restaurant apps” as shorthand
to describe the third-party food delivery services and third-party courier services covered by the Delivery
Worker Laws. These phrases do not encompass delivery from apps that are not covered by the Delivery
Worker Laws, such as supermarket or quick-delivery convenience store apps. 4
The report is organized as follows. Section 2 briefly summarizes the Department’s sources and methods.
Section 3 describes the apps, consumers, and restaurants, providing essential context for the analysis
presented in the following sections. Section 4 describes the present conditions of app delivery workers,
including their pay, hours, modes of transportation, expenses, safety conditions, and demographics. Section 5
presents the Department’s proposed minimum pay rate and discusses its key features. Section 6 models the
minimum pay rate’s impact on apps, consumers, restaurants, and workers. Section 7 concludes. Throughout
this report, for ease of reference, key terms are introduced in bold.
1
NYC Administrative Code § 20-1522.
2
Id. §§ 20-1501–1524, 20-563.2, and 20-563.6.
3
Id. §§ 20-563–20-563.13.
4
See id. § 20-1501.
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2 Sources and Methods
The Department’s study draws principally on data that the Department obtained from apps in response to
administrative subpoenas combined with a survey that was distributed to nearly all of the approximately
123,000 workers who performed app deliveries in NYC between October and December 2021. The study also
draws on additional sources, including a separate in-person field survey of more than 400 delivery workers, a
survey of restaurant owners and managers that was distributed to all of the approximately 23,000 restaurants in
NYC, testimony from a public hearing on delivery worker pay and working conditions, expert and stakeholder
interviews, and public information. This section provides a high-level summary of these sources and their use in
the study.
Sources
Pursuant to its authority under the Minimum Pay Law, 5 the Department issued subpoenas requesting data and
documents to all apps identified as potentially engaging independent contractors to perform restaurant
deliveries in NYC. These subpoenas resulted in the production of information covering January 1, 2021 through
June 30, 2022 from Uber Technologies, Inc., Grubhub, Inc., DoorDash Inc., and Relay Delivery, Inc.
(hereinafter referred to as Uber Eats, Grubhub, DoorDash, and Relay respectively). The Department
determined that these apps are collectively responsible for 99% of app deliveries in NYC. Through this process,
the Department also obtained data and information from all other apps it identified as engaging independent
contractors to perform deliveries in NYC. These apps are Chowbus Inc. (Chowbus), Club Feast Inc. (Club
Feast), Just Order Enterprises Corp. (Fantuan), HungryPanda US Inc. (HungryPanda), Patio Delivery, Inc.
(Patio), and GoHive Inc. (GoHive).
The information produced by Uber Eats, Grubhub, DoorDash, and Relay included four types of data. First,
record-level data for all workers who accepted an offer to perform a delivery in NYC in the fourth quarter of
2021, including the phone and email from each account profile and information about each trip, payment, and
login in the quarter. Second, ZIP code summary data on sales and payments to workers aggregated by
consumer and worker ZIP code for the fourth quarter of 2021. Third, merchant summary data on sales
aggregated by type of merchant for the fourth quarter of 2021. Fourth, weekly summary data for each week
from January 1, 2021 through June 30, 2022, including, for each app, total deliveries, hours, and pay.
The Department entered into confidentiality agreements with the apps that govern the Department’s use of data
and other information that the apps consider to be trade secrets. Though the Department used such
information in its study and deliberation to determine the minimum pay rate, the Department is not publishing
any information that the apps designated confidential pursuant to these agreements.
To obtain information about workers’ expenses, demographics, and safety conditions, the Department used the
worker contact information obtained from the apps to conduct the NYC Delivery Worker Survey, a large-scale,
representative survey of app delivery workers in NYC. The Department distributed an online survey form by
text message and email to 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. In total, between June 8 and July
26, 2022, the Department sent messages to 179,354 phone numbers and 192,546 email addresses, each
including a custom link allowing the Department to match survey responses to the other record-level data
obtained from the apps. The Department estimates that these phone numbers and emails belonged to 122,539
unique individuals, including 122,104 individuals who had worked for Uber Eats, Grubhub, DoorDash, and/or
Relay. The text messages, emails, and survey forms were delivered in Arabic, Bengali, Chinese, English,
French, Korean, Russian, Spanish, and Urdu. To limit the survey length, the Department divided its
5
Id. § 1522(a)(2).
2
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questionnaire into three modules, focusing on vehicle-related expenses (including e-bike, car, and moped
expenses), non-vehicle expenses (e.g., phones), and safety and demographics. Each account was randomly
assigned to receive one of the three modules. Within each module, survey length varied due to use of
branching and skip logic. On average, respondents took four minutes and 23 seconds to complete the survey,
answering 12 questions.
The Department received 7,956 responses from workers at Uber Eats, Grubhub, DoorDash, or Relay that
satisfied its inclusion criteria, 6 consisting of 2,963 for the vehicle expense module, 2,843 for the non-vehicle
expenses module, and 2,150 for the safety and demographics module. The combined 7,956 responses
represent 6.5% of the estimated 122,104 unique individuals in the sample for these apps, after accounting for
some workers’ practice of maintaining multiple accounts. This response rate is several times the rate obtained
by leading academic researchers conducting online surveys concerning low-wage work. 7
The Department also conducted a separate in-person field survey of delivery workers, in partnership with Sam
Schwartz Engineering, a leading transportation engineering firm, Worker's Justice Project, a NYC-based
worker center and sponsor of the Los Deliveristas Unidos campaign, and the Columbia University Labor Lab,
an applied research program of Columbia University (referenced herein as the “Columbia-Sam Schwartz-
Deliveristas Survey”). The 58-item questionnaire asked workers about their work history, expenses,
experiences with discipline and non-payment on the apps, and safety conditions. Respondents were recruited
from delivery workers visiting Worker's Justice Project offices, at Los Deliveristas Unidos events held
throughout the city, and through street canvassing at locations where delivery workers are known to
congregate. Respondents completed the survey using an online form, mostly onsite at these locations. The
survey was fielded between April 25 and July 15, 2022 in Bengali, Chinese, English, French, and Spanish, and
generated 465 responses that met the Department’s inclusion criteria. 8 Though covering similar material as the
Department’s NYC Delivery Worker Survey, the two questionnaires differed in their design and wording.
To adequately consider the impacts of a minimum pay rate on restaurants, the Department fielded a survey of
restaurant owners and managers (the “NYC Restaurant Delivery Survey”). The self-administered online
survey consisted of 15 questions about the volume of deliveries at respondents’ restaurants and how these
deliveries were fulfilled. The survey was distributed by the NYC Department of Small Business Services’ (SBS)
Food and Beverage Industry Partnership, the NYC Hospitality Alliance, and the New York State Restaurant
Association to their respective contact lists of restaurant owners and managers. It was fielded between June 28
and July 22, 2022. The SBS contact list is continuously updated based on the contacts listed in restaurants’
food service establishment permit applications and is comprehensive of the approximately 23,000 restaurants
in NYC. The Department’s NYC Restaurant Delivery Survey was fielded in Chinese, English, and Spanish. The
Department received 371 responses that met the Department’s inclusion criteria, 9 equal to approximately
1.61% of the restaurants in NYC. The distribution of respondents by cuisine, borough, number of employees,
and level of service (i.e., full-service vs. limited service) was representative of all food service establishments in
NYC.
To gather additional information on delivery worker pay, working conditions, and the delivery industry, the
Department used its authority under the City Charter to hold a public hearing on June 15, 2022. 10 The
6
The Department excluded responses if the respondent did not affirm that they were over 18 and freely participating in the survey, if the
respondent reported that they had never worked for an app, if the respondent failed certain tests for reliability embedded into the
questionnaires, if more than one response was associated with a worker’s contact information, or if the record-level data obtained from apps
showed no working hours for all accounts associated with the respondent’s phone number. The Department also excluded some responses
due to a technical failure in certain text messages.
7
See, e.g., Daniel Schneider & Kristen Harknett, Schedule instability and unpredictability and worker and family health and wellbeing,
Washington Center for Equitable Growth (Sept. 2016) (discussing a survey response rate of 0.4% to Facebook advertisements targeting low-
wage service-sector workers), http://cdn.equitablegrowth.org/wp-content/uploads/2016/09/12135618/091216-WP-Schedule-instability-and-
unpredictability.pdf (last accessed Oct. 28, 2022).
8
The Department excluded responses if the respondent did not affirm that they were over 18 and freely consenting to participate or if the
respondent reported that they had never worked for an app.
9
The Department excluded responses if the respondent did not affirm that they were over 18 and freely consenting to participate.
10
See NYC Charter § 2203(h).
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Department received written or oral testimony from 73 individuals and 45 organizations. 11 Members of several
worker advocacy groups testified, including Worker's Justice Project, the NYC Food Delivery Movement,
International Alliance of Delivery Workers, New Immigrant Community Empowerment, the National
Employment Law Project, and Desis Rising Up and Moving. Representatives from DoorDash and Uber also
testified.
The Department gathered further qualitative information for the study through frequent meetings,
conversations, and interviews with delivery workers, worker advocates, app representatives, and restaurant
association representatives. The Department also heard presentations from DoorDash, Uber Eats, and
Grubhub in which they presented their views about the minimum pay rate. The Department also gathered
information from officials at other City agencies with relevant subject matter expertise, including SBS, the Fire
Department of the City of New York (FDNY), the NYC Department of Health and Mental Hygiene (DOHMH),
the NYC Taxi and Limousine Commission (TLC), and the NYC Department of Transportation (NYC DOT).
Lastly, the Department used publicly available information in portions of its study, including prior studies, news
articles, corporate financial reports, legal and regulatory documents, and public use data from government
agencies.
Methods
This report presents results from descriptive analyses of apps, consumers, restaurants, and delivery workers
(sections 3 and 4) and a structural model the Department developed to estimate the prospective effects of the
proposed minimum pay rate (section 6). Except where noted, the report presents results only for Uber Eats,
DoorDash, Grubhub, and Relay.
Though each section of the report notes the methods that produced the accompanying results, the Department
presents a few general comments here.
First, some terminology. The Department uses “delivery” to refer to the pickup and drop-off of a single order
and “trip” to refer to the unit of work offered to a delivery worker, consistent with the definition of this term in the
Delivery Worker Laws. 12 A trip usually consists of a single delivery but may include multiple deliveries. The
Department uses both terms in this report depending on context and the nature of the underlying data. When
discussing workers’ incomes, “pay” refers to the compensation paid by the app exclusive of tips, “earnings” is
the sum of pay and tips, and “net pay” and “net earnings” are pay and earnings, respectively, less expenses.
With respect to workers’ time, “hours worked” or “working time,” as used in this report, consists of all “trip
time” (i.e., the time between acceptance of a trip offer and its completion) and all “on-call time” (i.e., time in
which a worker is connected to the app in a status where they can receive or accept trip offers, excluding trip
time). Trip time includes travel to a restaurant, any time waiting for an order to be prepared, pickup at the
restaurant, travel to the destination, and drop-off with the consumer.
Second, except where noted, the Department takes care to only present statistics that reflect controls for the
common practice of workers maintaining accounts with multiple apps (“multi-apping”), including the less
frequent practice of logging into multiple apps concurrently. The Department assessed multi-apping by
matching worker accounts across apps using their account phone numbers and analyzing their responses
about the apps they work for from the Department’s NYC Delivery Worker Survey. For example, the record-
level data obtained from apps showed that 219,787 accounts were associated with a delivery in NYC at Uber
Eats, Grubhub, DoorDash, or Relay in the fourth quarter of 2021 and that these accounts logged 20.21 million
hours of working time. However, after adjustment for multi-apping, the Department estimates these accounts
11
See Delivery Worker Public Hearing Transcript, NYC Department of Consumer and Worker Protection (June 15, 2022) and Delivery Worker
Public Hearing Written Testimony, NYC Department of Consumer and Worker Protection (June 15, 2022), https: //www.nyc.gov/deliveryapps.
12
See NYC Administrative Code § 20-1501 (“trip” is “the time spent, distance travelled, and route followed by a worker to provide delivery
services to a consumer through a third-party food delivery service or third-party courier service, including travel to a business, picking up the
food, beverage, or other goods for delivery, and taking and depositing such delivery at a different location as requested”).
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were held by 122,104 unique individuals who spent 17.16 million hours connected to at least one app. These
adjustments reflect the Department’s estimate of the percent of workers with multiple accounts (56.3%), which
it calculated from the NYC Delivery Worker Survey, and the Department’s estimate of the percent of working
time workers logged concurrently. To estimate the latter, the Department used the record-level data it obtained
from the apps to analyze the login and logoff times of workers who used the same phone number with multiple
apps, then extrapolated to the 56.3% of the workers who maintain multiple accounts (as measured from NYC
Delivery Worker Survey data). Using this method, the Department estimates that workers spend 17.7% of
working time connected to more than one app. The Department performed this analysis separately for non-car
workers, car workers, and all workers.
Third, in its measurement of delivery worker expenses, the Department generally adheres to Internal Revenue
Service (IRS) guidelines for the deduction of business expenses on tax returns. For most cost categories, the
Department identified the items purchased by workers through its NYC Delivery Worker Survey and separately
gathered market prices from retailers or other independent sources. Using market prices rather than workers’
recollections of dollar amounts they spent generally provides for more accurate expense estimation.
Fourth, in all its analyses of its NYC Delivery Worker Survey, the Department applied post-stratification weights
to address possible non-response bias. To develop the weights, the Department defined 20 strata within the
record-level data by the mix of apps (Uber Eats only, DoorDash only, Grubhub only, Relay only, and multiple)
and quartile of hours worked. This allows the Department to control for differences in response rates between
workers with more hours and workers with fewer hours, for differences in response rates between apps, and for
differences in response rates between workers who work for multiple apps and workers who work for only one
app. The Department developed separate post-stratification weights for each survey module and for analyses
that pooled multiple modules. The Columbia-Sam Schwartz-Deliveristas Survey was drawn from a convenience
sample, so results are presented without weighting. Because responses to the Department’s NYC Restaurant
Delivery Survey showed good representativeness on observables, the Department determined weighting was
unnecessary.
Fifth, for convenience, the Department refers to the merchants on apps’ platforms as “restaurants.” Restaurant
delivery is a requirement for an app to be covered under the Delivery Worker Laws, though some covered apps
also engage workers to perform deliveries from convenience stores, grocery stores, or other retailers, in
addition to restaurants. However, non-restaurant deliveries are not provided by covered apps in NYC on a
scale sufficient to justify a differentiated analysis. Except where noted, restaurant and non-restaurant deliveries
are treated as undifferentiated throughout this report. The Department interprets its findings aware of this
limitation and determined that it does not materially impact the study results or the basis for the minimum pay
rate.
Lastly, the model used by the Department to estimate potential impacts relies on assumptions about how apps,
consumers, workers, and restaurants will respond to the minimum pay rate. It also relies on assumptions about
how the delivery industry in NYC would evolve in the absence of a minimum pay rate. Though the results
reported reflect the Department’s best estimate of likely impacts, the Department also estimated results under
alternative assumptions for key parameters and considered them in its deliberations.
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3 Overview of the Apps, Consumers,
and Restaurants
This section provides information the Department gathered for the study on apps, consumers, and restaurants.
Apps
Apps provide either or both of two related services: a marketplace service that allows a consumer to search for
restaurants and place orders online; and a courier service, in which the app dispatches a worker to a restaurant
to pick up the food and deliver it to the consumer. If an app provides a marketplace service, NYC requires the
app to obtain a license from the Department and limits the fees it can charge restaurants. 13 If an app provides a
courier service, it is covered by the Minimum Pay Law, as well as most other provisions of the Delivery Worker
Laws. 14 In the case of the three largest delivery apps, Uber Eats, Grubhub, and DoorDash, the two services are
usually combined, so when a consumer orders through an app, a worker dispatched by that same app arrives
at the consumer’s door. A restaurant may also elect to receive orders through an app’s marketplace but still
send its own employee to do the delivery. Conversely, a restaurant might receive an order over the phone or
through its own website but then use one of the delivery apps to dispatch a worker to come pick the food up
and deliver it. A restaurant might also receive an order through one app’s marketplace but use another to fulfill
the delivery. Consumers also use apps’ marketplace service to place orders that they pick up themselves.
When app delivery first developed in NYC, it was a marketplace-only service, with the deliveries still performed
by restaurant employees. Over time, delivery by workers dispatched by apps, and engaged by the apps as
independent contractors, became the more common arrangement. Growth was rapid throughout the 2010’s
and increased sharply with the onset of the pandemic, as orders increased by more than 50% in the NYC
metro area 15 and doubled nationally. 16 Since then, the app delivery industry has not contracted to its pre-
pandemic size. Growth has only continued. 17 In NYC, there were 17% more deliveries in the first six months of
2022 than the same period in 2021, 18 and app delivery in the United States is now more than four times larger
than at the start of 2018. 19
This fast growth has resulted in delivery apps quickly becoming an important part of the NYC restaurant
market. Between March 2021 and May 2022, app deliveries accounted for $3.6 billion of the $24.7 billion in
NYC restaurant sales (15%). 20 Meals ordered through an app, either for consumer pickup or delivery by a
restaurant employee, account for an additional share of sales.
13
Id. §§ 20-563 and 20-563.1. Apps that provide a marketplace service are also required to disclose to a delivery worker how much such
worker earned in gratuities and to enter into an agreement with each restaurant on its platform that allows workers to use such restaurant’s
bathroom. See id. §§ 20-563.2 and 20-563.6.
14
Id. §§ 20-1501–1524.
15
See U.S. Food Delivery Mid-Month update: Data through 6/21/22, YipitData (June 23, 2022).
16
See Kabir Ahuja et al., Ordering in: The rapid evolution of food delivery, McKinsey and Company (Sept. 22, 2021),
https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/ordering-in-the-rapid-evolution-of-food-delivery
(last accessed Oct. 28, 2022).
17
See YipitData, supra note 15.
18
Department analysis of weekly aggregate data obtained from apps.
19
See Kabir Ahuja et al., supra note 16.
20
Department analysis of weekly aggregate data obtained from apps, in combination with data on taxable sales in New York. Taxable sales
and purchases by geography and industry through May 2022, NYS Department of Taxation and Finance (July 21, 2022),
https://www.tax.ny.gov/research/stats/stat_excise/taxable_sales_and_purchases/taxable_sales_and
_purchases_open_data.htm (last accessed Sept. 30, 2022).
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Figure 1. Restaurant Sales in NYC ($, in billions)
0.8
0.7
0.6 0.8
4
0.7
5.1
4.2 4.5
2 4.0
3.3
Mar - May Jun - Aug Sep - Nov Dec 2021 - Mar - May
2021 2021 2021 Feb 2022 2022
Values for app delivery only include deliveries in which the app engaged the delivery worker to perform the delivery. Source: Department analysis of
weekly aggregate data obtained from apps and quarterly data on taxable sales from the NYS Department of Taxation and Finance. 21
The Department has identified 10 apps that engage independent contractors to perform restaurant deliveries in
NYC. The four largest (Uber Eats, Grubhub, DoorDash, and Relay) are responsible for nearly all app deliveries
in NYC (99%), performing 124 million deliveries in NYC between July 2021 and June 2022. 22 The remainder of
the market consists of three smaller apps (Chowbus, HungryPanda, and Fantuan), one app catering business
(Club Feast), and two recent entrants to the NYC market (Patio and GoHive). Additional businesses offer
marketplace services to restaurants in NYC but do not hire, retain or engage delivery workers.
The three largest apps (Uber Eats, DoorDash, Grubhub) are all global, publicly-traded companies. According to
a report by McKinsey & Company, Uber Eats, including Postmates Inc. (Postmates) which it acquired in
2020, 23 is the market leader locally, with approximately 40% of marketplace sales in NYC. 24 Grubhub, which
merged with Seamless in 2013 25 and was purchased by the Netherlands-based Just Eat in 2021, has about
35%. 26 DoorDash, which is the largest and fastest-growing nationally, 27 holds only about a 25% share in
NYC. 28 The Department estimates that the deliveries that Uber Eats, DoorDash, and Grubhub perform in NYC
generate about 4.8% of their global delivery revenue 29 and 2.5% of their revenue across all lines of business. 30
Despite large losses, which are not uncommon for growing technology companies, the three apps had a
combined $75 billion market capitalization as of October 2, 2022. 31
Relay, the fourth largest delivery app, is an NYC-based startup, and the only one operating in NYC that does
not have a consumer-facing mobile application or website. Instead of marketing to consumers, Relay serves
restaurants as a lower-cost option to fulfill their deliveries. 32
21
See NYS Department of Taxation and Finance, supra note 20.
22
Department analysis of weekly aggregate data obtained from apps.
23
See Uber Completes Acquisition of Postmates, Uber Investor (Dec. 1, 2020), https://investor.uber.com/news-events/news/press-release-
details/2020/Uber-Completes-Acquisition-of-Postmates/default.aspx (last accessed Sept. 30, 2022).
24
See Kabir Ahuja et al., supra note 16.
25
See Seamless and Grubhub Announce Merger, PR Newswire (May 20, 2013), https://www.prnewswire.com/news-releases/seamless-and-
grubhub-announce-merger-208124841.html (last accessed Sept. 30, 2022).
26
See Kabir Ahuja et al., supra note 16.
27
Id.
28
Id.
29
See Uber Tech., Inc., Quarterly Report (Form 10-Q) (Aug. 4, 2022); see DoorDash, Inc., Quarterly Report (Form 10-Q) (Aug. 5, 2022); see
Half Year 2022 Results, Just Eat Takeaway.com (Aug. 3, 2022), https://s3.eu-central-1.amazonaws.com/takeaway-corporatewebsite-dev/03-
08-2022-Press-Release-Just-Eat-Takeaway.com-Half-Year-2022-Results.pdf.
30
See id.
31
See Market capitalization of DoorDash from 2020-2022, Companies Marketcap, https://companiesmarketcap.com/doordash/marketcap (last
accessed Oct. 5, 2022); see Market capitalization of Just Eat Takeaway from 2016 to 2022, Companies Marketcap,
https://companiesmarketcap.com/just-eat-takeaway/marketcap (last accessed Oct. 5, 2022); see Market capitalization of Uber from 2019-
2022, Companies Marketcap, https://companiesmarketcap.com/uber/marketcap (last accessed Oct. 5, 2022).
32
See Grow your restaurant’s margins by switching to Relay, Relay, https://www.relay.delivery (last accessed Sept. 30, 2022).
7
R.12
FILED: NEW YORK COUNTY CLERK 12/20/2023 03:48 PM INDEX NO. 155943/2023
NYSCEF DOC. NO. 123 RECEIVED NYSCEF: 12/20/2023
Delivery apps generate revenue by charging fees to restaurants and consumers (except for Relay, which charges
only restaurants). Delivery worker pay is the main cost they incur.
Figure 2. Unit Economics of App Delivery in NYC, July 2021 – June 2022 ($)
33.09 18.33
30
20
4.11
2.11
3.06 8.54 4.32
10
5.48
4.22
Paid by Restaurant Tip Taxes Fees App share App Delivery Gross
consumer share of charged to of order revenue worker margin
order consumer subtotal pay
subtotal
Source: Department analysis of weekly aggregate data obtained from apps. Visualization adapted from Kabir Ahuja et al. 33
Figure 2 breaks down the amount paid by a consumer on an average order in NYC between July 2021 and
June 2022. Moving left to right, the total cost to the consumer was $33.09, consisting of the $18.33 that went to
the restaurant, $4.11 to the worker in tips, $2.11 in taxes, $3.06 in fees charged to the consumer by the app,
and $5.48 that the app received as its share of the order subtotal (i.e., the app’s commission, usually taken by
the app as a percentage of the order subtotal). App revenue ($8.54) is the sum of the consumer fees and this
commission. Out of this, apps paid an average of $4.32 to the delivery worker, leaving a remainder of $4.22 as
the app’s gross margin.
Several insights emerge from this analysis. At $33.09, the total cost to the consumer is 39% more than the
$23.81 order subtotal (represented in Figure 2 as the sum of the restaurant share of
Preview
FILED: NEW YORK COUNTY CLERK 12/20/2023 03:48 PM INDEX NO. 155943/2023 NYSCEF DOC. NO. 123 RECEIVED NYSCEF: 12/20/2023 ADMINISTRATIVE RECORD TABLE OF CONTENTS Page Volume 1 (R. 1-4932): Report and Rulemaking Materials A Minimum Pay Rate for App-Based Delivery Workers in NYC (“DCWP Report”) 1-43 June 15, 2021 Hearing Comments 44-144 June 15, 2021 Hearing Transcript 145-277 First Proposed Rule Statement of Basis and Purpose (“First SBP”) 278-291 First Proposed Rule Comments 292-2080 First Proposed Rule Hearing Transcript 2081-2162 Second Proposed Rule Statement of Basis and Purpose (“Second SBP”) 2163-2190 Second Proposed Rule Comments 2191-4734 Second Proposed Rule Hearing Transcript 4735-4898 Final Rule Notice of Adoption (“Final Rule SBP”) 4899-4932 FILED: NEW YORK COUNTY CLERK 12/20/2023 03:48 PM INDEX NO. 155943/2023 NYSCEF DOC. NO. 123 RECEIVED NYSCEF: 12/20/2023 A Minimum Pay Rate for App-Based Restaurant Delivery Workers in NYC R.1 FILED: NEW YORK COUNTY CLERK 12/20/2023 03:48 PM INDEX NO. 155943/2023 NYSCEF DOC. NO. 123 RECEIVED NYSCEF: 12/20/2023 © November 2022. New York City Department of Consumer and Worker Protection. All rights reserved. R.2 FILED: NEW YORK COUNTY CLERK 12/20/2023 03:48 PM INDEX NO. 155943/2023 NYSCEF DOC. NO. 123 RECEIVED NYSCEF: 12/20/2023 Acknowledgments The Department of Consumer and Worker Protection (the Department) acknowledges the following staff who contributed to this report: Marlee Belford, Matt Bondy, John De Vito, Anastasia Eriksson, Maria Jennings, Sam Krinsky, Elizabeth Major, Bryan Menegazzo, Maria Milosh, Alex Moran, Michael Papadopoulos, David Rauch, Michael Tiger, and Elizabeth Wagoner. The Department also collaborated with several partners and contractors. James Parrott, Ph.D., Director of Economic and Fiscal Policy for the Center for New York City Affairs at the New School, worked with the Department on an analysis of existing wage and benefit standards in NYC. Suresh Naidu, Ph.D., Professor of Economics and International and Public Affairs at Columbia University, worked with the Department in studying the effects of the proposed rule. Professor Adam Reich, Ph.D., and Patrick Youngblood of Columbia University, Andrew Wolf, Ph.D., of Rutgers University and the City University of New York (CUNY), Kate Sargent, Jen Roberton, Moriah Richardson, and Dorottya Miketa of Sam Schwartz Engineering, and Hildalyn Colón Hernández and Ligia Guallpa of the Worker's Justice Project, with the Department, developed and implemented a field survey of delivery worker expenses and working conditions. This survey was supported, in part, through funding from the Open Society Foundations and the Ford Foundation. Sherry Baron, M.D., M.P.H., Professor at the Barry Commoner Center for Health and the Environment and the Urban Studies Department, Queens College, CUNY, contributed to the Department’s analysis of delivery workers’ occupational injuries. Steven Picker of the Food and Beverage Industry Partnership at the NYC Department of Small Business Services (SBS), Andrew Rigie of the NYC Hospitality Alliance, and Kevin Dugan of the New York State Restaurant Association, with their colleagues, contributed to the Department’s survey of restaurant operators and distributed the survey questionnaire. Rodney Stiles, formerly of the NYC Taxi and Limousine Commission (TLC), Kerem Levitas of the City of Seattle Office of Labor Standards, and Erica Groshen, Ph.D., Senior Economics Advisor at the Institute for Labor Relations at Cornell University, provided advice and consultation. Julia Kite-Laidlaw, William Carry, and colleagues of the NYC Department of Transportation (NYC DOT), Fabricio Caro and Nicole Simmons of the Fire Department of the City of New York (FDNY), and Charlene Obernauer and Lara Maldjian of the New York Committee for Occupational Safety and Health (NYCOSH) provided insights into the safety and health concerns relating to app delivery. Do Jun Lee, Ph.D., Assistant Professor at the Urban Studies Department, Queens College, CUNY, and Jing Wang, Adjunct Assistant Professor at Brooklyn College and the College of Staten Island, CUNY, advised on the experiences of Chinese delivery workers in NYC. Ryan Wanttaja and James DiGiovanni of TLC shared their experiences implementing NYC’s minimum earnings standard for app for-hire service drivers. James Parrott, Suresh Naidu, Sherry Baron, Rodney Stiles, and Kate Sargent, with her colleagues at Sam Schwartz Engineering, also reviewed and commented on drafts of this report. i R.3 FILED: NEW YORK COUNTY CLERK 12/20/2023 03:48 PM INDEX NO. 155943/2023 NYSCEF DOC. NO. 123 RECEIVED NYSCEF: 12/20/2023 Abstract In this report, the Department discusses the findings of its study into the working conditions of restaurant delivery workers who are engaged by apps as independent contractors in NYC. This report includes an analysis of the pay and working conditions of this workforce, describes the Department’s proposed rule to establish a minimum pay rate for this work, and examines the minimum pay rate’s anticipated impacts on apps, consumers, restaurants, and workers. The Department’s analysis is based principally on data obtained from apps and an online survey distributed to 123,000 workers who performed deliveries in NYC in the fourth quarter of 2021. The Department supplemented these sources with an online survey distributed to all restaurants in NYC, an in-person field survey of more than 400 delivery workers, testimony from a public hearing, interviews with stakeholders and other experts, and analysis of publicly available data on pay, benefits, and safety conditions. The Department’s study finds that NYC’s app-based restaurant delivery workers currently earn $14.18 per hour with tips and $7.09 per hour without tips. Delivery workers’ hourly expenses are $3.06, reducing their take home pay to $11.12 per hour with tips and $4.03 per hour without tips. The Department also finds that app- based restaurant delivery workers experience high rates of occupational injury. The rate set forth in the proposed rule, after a two-year phase-in, would require restaurant apps to pay delivery workers who are engaged as independent contractors an average hourly rate of $23.82 per hour excluding tips, which is comprised of a $19.86 base rate, $1.70 to compensate for the absence of workers’ compensation insurance, and $2.26 to reflect workers’ expenses. Pay at this rate will provide for parity with workers covered by NYC’s existing minimum earnings standard for app for-hire service drivers and approximates the total compensation app-based restaurant delivery workers would receive if classified as employees. The Department’s study projects that the minimum pay rate will encourage apps to use workers’ time more efficiently, increasing deliveries from 1.6 to 2.5 per hour. Apps may choose to pass their remaining increase in labor costs to consumers through higher fees, increasing consumers’ cost of delivery by $5.18 per order, on average. Though higher fees will moderate growth, the Department projects that the number of app deliveries will still increase by 35% by 2025. The Department also projects that restaurants will be mostly unaffected by the minimum pay rate but may see a modest increase in profits if consumers respond to higher app fees by purchasing directly from restaurants. ii R.4 FILED: NEW YORK COUNTY CLERK 12/20/2023 03:48 PM INDEX NO. 155943/2023 NYSCEF DOC. NO. 123 RECEIVED NYSCEF: 12/20/2023 Table of Contents 1 Introduction ................................................................................................................................................... 1 2 Sources and Methods ................................................................................................................................... 2 3 Overview of the Apps, Consumers, and Restaurants ................................................................................... 6 4 Delivery Workers’ Pay and Working Conditions ......................................................................................... 12 5 Design of the Minimum Payment Standard ................................................................................................ 27 6 Effects of the Minimum Payment Standard................................................................................................. 34 7 Conclusion .................................................................................................................................................. 37 iii R.5 FILED: NEW YORK COUNTY CLERK 12/20/2023 03:48 PM INDEX NO. 155943/2023 NYSCEF DOC. NO. 123 RECEIVED NYSCEF: 12/20/2023 1 Introduction Section 20-1522 of the NYC Administrative Code requires the Department of Consumer and Worker Protection (the Department) to study the pay and working conditions of app-based restaurant delivery workers and, no later than January 1, 2023, establish a minimum pay rate for their work by rule. 1 Referenced herein as the Minimum Pay Law, this section was enacted in fall 2021 as part of a broader package of protections for app- based restaurant delivery workers in NYC, known as the Delivery Worker Laws. 2 This report refers to the app- based restaurant delivery workers who are covered by the Delivery Worker Laws as “app delivery workers.” A related package of laws, also enacted in fall 2021, requires most apps to obtain a license to operate in NYC and regulates their interactions with restaurants and consumers, including setting a limit on the fees that apps can charge restaurants. 3 This report summarizes the results of the Department’s study of the restaurant delivery app industry in NYC, discusses the Department’s proposed minimum pay rate, and examines the minimum pay rate’s prospective impact on apps, consumers, workers, and restaurants. Concurrently with release of this report, the Department is publishing the proposed rule establishing the minimum pay rate in the New York City Record. Throughout this report, the Department refers to “apps,” “app delivery,” and “restaurant apps” as shorthand to describe the third-party food delivery services and third-party courier services covered by the Delivery Worker Laws. These phrases do not encompass delivery from apps that are not covered by the Delivery Worker Laws, such as supermarket or quick-delivery convenience store apps. 4 The report is organized as follows. Section 2 briefly summarizes the Department’s sources and methods. Section 3 describes the apps, consumers, and restaurants, providing essential context for the analysis presented in the following sections. Section 4 describes the present conditions of app delivery workers, including their pay, hours, modes of transportation, expenses, safety conditions, and demographics. Section 5 presents the Department’s proposed minimum pay rate and discusses its key features. Section 6 models the minimum pay rate’s impact on apps, consumers, restaurants, and workers. Section 7 concludes. Throughout this report, for ease of reference, key terms are introduced in bold. 1 NYC Administrative Code § 20-1522. 2 Id. §§ 20-1501–1524, 20-563.2, and 20-563.6. 3 Id. §§ 20-563–20-563.13. 4 See id. § 20-1501. 1 R.6 FILED: NEW YORK COUNTY CLERK 12/20/2023 03:48 PM INDEX NO. 155943/2023 NYSCEF DOC. NO. 123 RECEIVED NYSCEF: 12/20/2023 2 Sources and Methods The Department’s study draws principally on data that the Department obtained from apps in response to administrative subpoenas combined with a survey that was distributed to nearly all of the approximately 123,000 workers who performed app deliveries in NYC between October and December 2021. The study also draws on additional sources, including a separate in-person field survey of more than 400 delivery workers, a survey of restaurant owners and managers that was distributed to all of the approximately 23,000 restaurants in NYC, testimony from a public hearing on delivery worker pay and working conditions, expert and stakeholder interviews, and public information. This section provides a high-level summary of these sources and their use in the study. Sources Pursuant to its authority under the Minimum Pay Law, 5 the Department issued subpoenas requesting data and documents to all apps identified as potentially engaging independent contractors to perform restaurant deliveries in NYC. These subpoenas resulted in the production of information covering January 1, 2021 through June 30, 2022 from Uber Technologies, Inc., Grubhub, Inc., DoorDash Inc., and Relay Delivery, Inc. (hereinafter referred to as Uber Eats, Grubhub, DoorDash, and Relay respectively). The Department determined that these apps are collectively responsible for 99% of app deliveries in NYC. Through this process, the Department also obtained data and information from all other apps it identified as engaging independent contractors to perform deliveries in NYC. These apps are Chowbus Inc. (Chowbus), Club Feast Inc. (Club Feast), Just Order Enterprises Corp. (Fantuan), HungryPanda US Inc. (HungryPanda), Patio Delivery, Inc. (Patio), and GoHive Inc. (GoHive). The information produced by Uber Eats, Grubhub, DoorDash, and Relay included four types of data. First, record-level data for all workers who accepted an offer to perform a delivery in NYC in the fourth quarter of 2021, including the phone and email from each account profile and information about each trip, payment, and login in the quarter. Second, ZIP code summary data on sales and payments to workers aggregated by consumer and worker ZIP code for the fourth quarter of 2021. Third, merchant summary data on sales aggregated by type of merchant for the fourth quarter of 2021. Fourth, weekly summary data for each week from January 1, 2021 through June 30, 2022, including, for each app, total deliveries, hours, and pay. The Department entered into confidentiality agreements with the apps that govern the Department’s use of data and other information that the apps consider to be trade secrets. Though the Department used such information in its study and deliberation to determine the minimum pay rate, the Department is not publishing any information that the apps designated confidential pursuant to these agreements. To obtain information about workers’ expenses, demographics, and safety conditions, the Department used the worker contact information obtained from the apps to conduct the NYC Delivery Worker Survey, a large-scale, representative survey of app delivery workers in NYC. The Department distributed an online survey form by text message and email to 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. In total, between June 8 and July 26, 2022, the Department sent messages to 179,354 phone numbers and 192,546 email addresses, each including a custom link allowing the Department to match survey responses to the other record-level data obtained from the apps. The Department estimates that these phone numbers and emails belonged to 122,539 unique individuals, including 122,104 individuals who had worked for Uber Eats, Grubhub, DoorDash, and/or Relay. The text messages, emails, and survey forms were delivered in Arabic, Bengali, Chinese, English, French, Korean, Russian, Spanish, and Urdu. To limit the survey length, the Department divided its 5 Id. § 1522(a)(2). 2 R.7 FILED: NEW YORK COUNTY CLERK 12/20/2023 03:48 PM INDEX NO. 155943/2023 NYSCEF DOC. NO. 123 RECEIVED NYSCEF: 12/20/2023 questionnaire into three modules, focusing on vehicle-related expenses (including e-bike, car, and moped expenses), non-vehicle expenses (e.g., phones), and safety and demographics. Each account was randomly assigned to receive one of the three modules. Within each module, survey length varied due to use of branching and skip logic. On average, respondents took four minutes and 23 seconds to complete the survey, answering 12 questions. The Department received 7,956 responses from workers at Uber Eats, Grubhub, DoorDash, or Relay that satisfied its inclusion criteria, 6 consisting of 2,963 for the vehicle expense module, 2,843 for the non-vehicle expenses module, and 2,150 for the safety and demographics module. The combined 7,956 responses represent 6.5% of the estimated 122,104 unique individuals in the sample for these apps, after accounting for some workers’ practice of maintaining multiple accounts. This response rate is several times the rate obtained by leading academic researchers conducting online surveys concerning low-wage work. 7 The Department also conducted a separate in-person field survey of delivery workers, in partnership with Sam Schwartz Engineering, a leading transportation engineering firm, Worker's Justice Project, a NYC-based worker center and sponsor of the Los Deliveristas Unidos campaign, and the Columbia University Labor Lab, an applied research program of Columbia University (referenced herein as the “Columbia-Sam Schwartz- Deliveristas Survey”). The 58-item questionnaire asked workers about their work history, expenses, experiences with discipline and non-payment on the apps, and safety conditions. Respondents were recruited from delivery workers visiting Worker's Justice Project offices, at Los Deliveristas Unidos events held throughout the city, and through street canvassing at locations where delivery workers are known to congregate. Respondents completed the survey using an online form, mostly onsite at these locations. The survey was fielded between April 25 and July 15, 2022 in Bengali, Chinese, English, French, and Spanish, and generated 465 responses that met the Department’s inclusion criteria. 8 Though covering similar material as the Department’s NYC Delivery Worker Survey, the two questionnaires differed in their design and wording. To adequately consider the impacts of a minimum pay rate on restaurants, the Department fielded a survey of restaurant owners and managers (the “NYC Restaurant Delivery Survey”). The self-administered online survey consisted of 15 questions about the volume of deliveries at respondents’ restaurants and how these deliveries were fulfilled. The survey was distributed by the NYC Department of Small Business Services’ (SBS) Food and Beverage Industry Partnership, the NYC Hospitality Alliance, and the New York State Restaurant Association to their respective contact lists of restaurant owners and managers. It was fielded between June 28 and July 22, 2022. The SBS contact list is continuously updated based on the contacts listed in restaurants’ food service establishment permit applications and is comprehensive of the approximately 23,000 restaurants in NYC. The Department’s NYC Restaurant Delivery Survey was fielded in Chinese, English, and Spanish. The Department received 371 responses that met the Department’s inclusion criteria, 9 equal to approximately 1.61% of the restaurants in NYC. The distribution of respondents by cuisine, borough, number of employees, and level of service (i.e., full-service vs. limited service) was representative of all food service establishments in NYC. To gather additional information on delivery worker pay, working conditions, and the delivery industry, the Department used its authority under the City Charter to hold a public hearing on June 15, 2022. 10 The 6 The Department excluded responses if the respondent did not affirm that they were over 18 and freely participating in the survey, if the respondent reported that they had never worked for an app, if the respondent failed certain tests for reliability embedded into the questionnaires, if more than one response was associated with a worker’s contact information, or if the record-level data obtained from apps showed no working hours for all accounts associated with the respondent’s phone number. The Department also excluded some responses due to a technical failure in certain text messages. 7 See, e.g., Daniel Schneider & Kristen Harknett, Schedule instability and unpredictability and worker and family health and wellbeing, Washington Center for Equitable Growth (Sept. 2016) (discussing a survey response rate of 0.4% to Facebook advertisements targeting low- wage service-sector workers), http://cdn.equitablegrowth.org/wp-content/uploads/2016/09/12135618/091216-WP-Schedule-instability-and- unpredictability.pdf (last accessed Oct. 28, 2022). 8 The Department excluded responses if the respondent did not affirm that they were over 18 and freely consenting to participate or if the respondent reported that they had never worked for an app. 9 The Department excluded responses if the respondent did not affirm that they were over 18 and freely consenting to participate. 10 See NYC Charter § 2203(h). 3 R.8 FILED: NEW YORK COUNTY CLERK 12/20/2023 03:48 PM INDEX NO. 155943/2023 NYSCEF DOC. NO. 123 RECEIVED NYSCEF: 12/20/2023 Department received written or oral testimony from 73 individuals and 45 organizations. 11 Members of several worker advocacy groups testified, including Worker's Justice Project, the NYC Food Delivery Movement, International Alliance of Delivery Workers, New Immigrant Community Empowerment, the National Employment Law Project, and Desis Rising Up and Moving. Representatives from DoorDash and Uber also testified. The Department gathered further qualitative information for the study through frequent meetings, conversations, and interviews with delivery workers, worker advocates, app representatives, and restaurant association representatives. The Department also heard presentations from DoorDash, Uber Eats, and Grubhub in which they presented their views about the minimum pay rate. The Department also gathered information from officials at other City agencies with relevant subject matter expertise, including SBS, the Fire Department of the City of New York (FDNY), the NYC Department of Health and Mental Hygiene (DOHMH), the NYC Taxi and Limousine Commission (TLC), and the NYC Department of Transportation (NYC DOT). Lastly, the Department used publicly available information in portions of its study, including prior studies, news articles, corporate financial reports, legal and regulatory documents, and public use data from government agencies. Methods This report presents results from descriptive analyses of apps, consumers, restaurants, and delivery workers (sections 3 and 4) and a structural model the Department developed to estimate the prospective effects of the proposed minimum pay rate (section 6). Except where noted, the report presents results only for Uber Eats, DoorDash, Grubhub, and Relay. Though each section of the report notes the methods that produced the accompanying results, the Department presents a few general comments here. First, some terminology. The Department uses “delivery” to refer to the pickup and drop-off of a single order and “trip” to refer to the unit of work offered to a delivery worker, consistent with the definition of this term in the Delivery Worker Laws. 12 A trip usually consists of a single delivery but may include multiple deliveries. The Department uses both terms in this report depending on context and the nature of the underlying data. When discussing workers’ incomes, “pay” refers to the compensation paid by the app exclusive of tips, “earnings” is the sum of pay and tips, and “net pay” and “net earnings” are pay and earnings, respectively, less expenses. With respect to workers’ time, “hours worked” or “working time,” as used in this report, consists of all “trip time” (i.e., the time between acceptance of a trip offer and its completion) and all “on-call time” (i.e., time in which a worker is connected to the app in a status where they can receive or accept trip offers, excluding trip time). Trip time includes travel to a restaurant, any time waiting for an order to be prepared, pickup at the restaurant, travel to the destination, and drop-off with the consumer. Second, except where noted, the Department takes care to only present statistics that reflect controls for the common practice of workers maintaining accounts with multiple apps (“multi-apping”), including the less frequent practice of logging into multiple apps concurrently. The Department assessed multi-apping by matching worker accounts across apps using their account phone numbers and analyzing their responses about the apps they work for from the Department’s NYC Delivery Worker Survey. For example, the record- level data obtained from apps showed that 219,787 accounts were associated with a delivery in NYC at Uber Eats, Grubhub, DoorDash, or Relay in the fourth quarter of 2021 and that these accounts logged 20.21 million hours of working time. However, after adjustment for multi-apping, the Department estimates these accounts 11 See Delivery Worker Public Hearing Transcript, NYC Department of Consumer and Worker Protection (June 15, 2022) and Delivery Worker Public Hearing Written Testimony, NYC Department of Consumer and Worker Protection (June 15, 2022), https: //www.nyc.gov/deliveryapps. 12 See NYC Administrative Code § 20-1501 (“trip” is “the time spent, distance travelled, and route followed by a worker to provide delivery services to a consumer through a third-party food delivery service or third-party courier service, including travel to a business, picking up the food, beverage, or other goods for delivery, and taking and depositing such delivery at a different location as requested”). 4 R.9 FILED: NEW YORK COUNTY CLERK 12/20/2023 03:48 PM INDEX NO. 155943/2023 NYSCEF DOC. NO. 123 RECEIVED NYSCEF: 12/20/2023 were held by 122,104 unique individuals who spent 17.16 million hours connected to at least one app. These adjustments reflect the Department’s estimate of the percent of workers with multiple accounts (56.3%), which it calculated from the NYC Delivery Worker Survey, and the Department’s estimate of the percent of working time workers logged concurrently. To estimate the latter, the Department used the record-level data it obtained from the apps to analyze the login and logoff times of workers who used the same phone number with multiple apps, then extrapolated to the 56.3% of the workers who maintain multiple accounts (as measured from NYC Delivery Worker Survey data). Using this method, the Department estimates that workers spend 17.7% of working time connected to more than one app. The Department performed this analysis separately for non-car workers, car workers, and all workers. Third, in its measurement of delivery worker expenses, the Department generally adheres to Internal Revenue Service (IRS) guidelines for the deduction of business expenses on tax returns. For most cost categories, the Department identified the items purchased by workers through its NYC Delivery Worker Survey and separately gathered market prices from retailers or other independent sources. Using market prices rather than workers’ recollections of dollar amounts they spent generally provides for more accurate expense estimation. Fourth, in all its analyses of its NYC Delivery Worker Survey, the Department applied post-stratification weights to address possible non-response bias. To develop the weights, the Department defined 20 strata within the record-level data by the mix of apps (Uber Eats only, DoorDash only, Grubhub only, Relay only, and multiple) and quartile of hours worked. This allows the Department to control for differences in response rates between workers with more hours and workers with fewer hours, for differences in response rates between apps, and for differences in response rates between workers who work for multiple apps and workers who work for only one app. The Department developed separate post-stratification weights for each survey module and for analyses that pooled multiple modules. The Columbia-Sam Schwartz-Deliveristas Survey was drawn from a convenience sample, so results are presented without weighting. Because responses to the Department’s NYC Restaurant Delivery Survey showed good representativeness on observables, the Department determined weighting was unnecessary. Fifth, for convenience, the Department refers to the merchants on apps’ platforms as “restaurants.” Restaurant delivery is a requirement for an app to be covered under the Delivery Worker Laws, though some covered apps also engage workers to perform deliveries from convenience stores, grocery stores, or other retailers, in addition to restaurants. However, non-restaurant deliveries are not provided by covered apps in NYC on a scale sufficient to justify a differentiated analysis. Except where noted, restaurant and non-restaurant deliveries are treated as undifferentiated throughout this report. The Department interprets its findings aware of this limitation and determined that it does not materially impact the study results or the basis for the minimum pay rate. Lastly, the model used by the Department to estimate potential impacts relies on assumptions about how apps, consumers, workers, and restaurants will respond to the minimum pay rate. It also relies on assumptions about how the delivery industry in NYC would evolve in the absence of a minimum pay rate. Though the results reported reflect the Department’s best estimate of likely impacts, the Department also estimated results under alternative assumptions for key parameters and considered them in its deliberations. 5 R.10 FILED: NEW YORK COUNTY CLERK 12/20/2023 03:48 PM INDEX NO. 155943/2023 NYSCEF DOC. NO. 123 RECEIVED NYSCEF: 12/20/2023 3 Overview of the Apps, Consumers, and Restaurants This section provides information the Department gathered for the study on apps, consumers, and restaurants. Apps Apps provide either or both of two related services: a marketplace service that allows a consumer to search for restaurants and place orders online; and a courier service, in which the app dispatches a worker to a restaurant to pick up the food and deliver it to the consumer. If an app provides a marketplace service, NYC requires the app to obtain a license from the Department and limits the fees it can charge restaurants. 13 If an app provides a courier service, it is covered by the Minimum Pay Law, as well as most other provisions of the Delivery Worker Laws. 14 In the case of the three largest delivery apps, Uber Eats, Grubhub, and DoorDash, the two services are usually combined, so when a consumer orders through an app, a worker dispatched by that same app arrives at the consumer’s door. A restaurant may also elect to receive orders through an app’s marketplace but still send its own employee to do the delivery. Conversely, a restaurant might receive an order over the phone or through its own website but then use one of the delivery apps to dispatch a worker to come pick the food up and deliver it. A restaurant might also receive an order through one app’s marketplace but use another to fulfill the delivery. Consumers also use apps’ marketplace service to place orders that they pick up themselves. When app delivery first developed in NYC, it was a marketplace-only service, with the deliveries still performed by restaurant employees. Over time, delivery by workers dispatched by apps, and engaged by the apps as independent contractors, became the more common arrangement. Growth was rapid throughout the 2010’s and increased sharply with the onset of the pandemic, as orders increased by more than 50% in the NYC metro area 15 and doubled nationally. 16 Since then, the app delivery industry has not contracted to its pre- pandemic size. Growth has only continued. 17 In NYC, there were 17% more deliveries in the first six months of 2022 than the same period in 2021, 18 and app delivery in the United States is now more than four times larger than at the start of 2018. 19 This fast growth has resulted in delivery apps quickly becoming an important part of the NYC restaurant market. Between March 2021 and May 2022, app deliveries accounted for $3.6 billion of the $24.7 billion in NYC restaurant sales (15%). 20 Meals ordered through an app, either for consumer pickup or delivery by a restaurant employee, account for an additional share of sales. 13 Id. §§ 20-563 and 20-563.1. Apps that provide a marketplace service are also required to disclose to a delivery worker how much such worker earned in gratuities and to enter into an agreement with each restaurant on its platform that allows workers to use such restaurant’s bathroom. See id. §§ 20-563.2 and 20-563.6. 14 Id. §§ 20-1501–1524. 15 See U.S. Food Delivery Mid-Month update: Data through 6/21/22, YipitData (June 23, 2022). 16 See Kabir Ahuja et al., Ordering in: The rapid evolution of food delivery, McKinsey and Company (Sept. 22, 2021), https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/ordering-in-the-rapid-evolution-of-food-delivery (last accessed Oct. 28, 2022). 17 See YipitData, supra note 15. 18 Department analysis of weekly aggregate data obtained from apps. 19 See Kabir Ahuja et al., supra note 16. 20 Department analysis of weekly aggregate data obtained from apps, in combination with data on taxable sales in New York. Taxable sales and purchases by geography and industry through May 2022, NYS Department of Taxation and Finance (July 21, 2022), https://www.tax.ny.gov/research/stats/stat_excise/taxable_sales_and_purchases/taxable_sales_and _purchases_open_data.htm (last accessed Sept. 30, 2022). 6 R.11 FILED: NEW YORK COUNTY CLERK 12/20/2023 03:48 PM INDEX NO. 155943/2023 NYSCEF DOC. NO. 123 RECEIVED NYSCEF: 12/20/2023 Figure 1. Restaurant Sales in NYC ($, in billions) 0.8 0.7 0.6 0.8 4 0.7 5.1 4.2 4.5 2 4.0 3.3 Mar - May Jun - Aug Sep - Nov Dec 2021 - Mar - May 2021 2021 2021 Feb 2022 2022 Values for app delivery only include deliveries in which the app engaged the delivery worker to perform the delivery. Source: Department analysis of weekly aggregate data obtained from apps and quarterly data on taxable sales from the NYS Department of Taxation and Finance. 21 The Department has identified 10 apps that engage independent contractors to perform restaurant deliveries in NYC. The four largest (Uber Eats, Grubhub, DoorDash, and Relay) are responsible for nearly all app deliveries in NYC (99%), performing 124 million deliveries in NYC between July 2021 and June 2022. 22 The remainder of the market consists of three smaller apps (Chowbus, HungryPanda, and Fantuan), one app catering business (Club Feast), and two recent entrants to the NYC market (Patio and GoHive). Additional businesses offer marketplace services to restaurants in NYC but do not hire, retain or engage delivery workers. The three largest apps (Uber Eats, DoorDash, Grubhub) are all global, publicly-traded companies. According to a report by McKinsey & Company, Uber Eats, including Postmates Inc. (Postmates) which it acquired in 2020, 23 is the market leader locally, with approximately 40% of marketplace sales in NYC. 24 Grubhub, which merged with Seamless in 2013 25 and was purchased by the Netherlands-based Just Eat in 2021, has about 35%. 26 DoorDash, which is the largest and fastest-growing nationally, 27 holds only about a 25% share in NYC. 28 The Department estimates that the deliveries that Uber Eats, DoorDash, and Grubhub perform in NYC generate about 4.8% of their global delivery revenue 29 and 2.5% of their revenue across all lines of business. 30 Despite large losses, which are not uncommon for growing technology companies, the three apps had a combined $75 billion market capitalization as of October 2, 2022. 31 Relay, the fourth largest delivery app, is an NYC-based startup, and the only one operating in NYC that does not have a consumer-facing mobile application or website. Instead of marketing to consumers, Relay serves restaurants as a lower-cost option to fulfill their deliveries. 32 21 See NYS Department of Taxation and Finance, supra note 20. 22 Department analysis of weekly aggregate data obtained from apps. 23 See Uber Completes Acquisition of Postmates, Uber Investor (Dec. 1, 2020), https://investor.uber.com/news-events/news/press-release- details/2020/Uber-Completes-Acquisition-of-Postmates/default.aspx (last accessed Sept. 30, 2022). 24 See Kabir Ahuja et al., supra note 16. 25 See Seamless and Grubhub Announce Merger, PR Newswire (May 20, 2013), https://www.prnewswire.com/news-releases/seamless-and- grubhub-announce-merger-208124841.html (last accessed Sept. 30, 2022). 26 See Kabir Ahuja et al., supra note 16. 27 Id. 28 Id. 29 See Uber Tech., Inc., Quarterly Report (Form 10-Q) (Aug. 4, 2022); see DoorDash, Inc., Quarterly Report (Form 10-Q) (Aug. 5, 2022); see Half Year 2022 Results, Just Eat Takeaway.com (Aug. 3, 2022), https://s3.eu-central-1.amazonaws.com/takeaway-corporatewebsite-dev/03- 08-2022-Press-Release-Just-Eat-Takeaway.com-Half-Year-2022-Results.pdf. 30 See id. 31 See Market capitalization of DoorDash from 2020-2022, Companies Marketcap, https://companiesmarketcap.com/doordash/marketcap (last accessed Oct. 5, 2022); see Market capitalization of Just Eat Takeaway from 2016 to 2022, Companies Marketcap, https://companiesmarketcap.com/just-eat-takeaway/marketcap (last accessed Oct. 5, 2022); see Market capitalization of Uber from 2019- 2022, Companies Marketcap, https://companiesmarketcap.com/uber/marketcap (last accessed Oct. 5, 2022). 32 See Grow your restaurant’s margins by switching to Relay, Relay, https://www.relay.delivery (last accessed Sept. 30, 2022). 7 R.12 FILED: NEW YORK COUNTY CLERK 12/20/2023 03:48 PM INDEX NO. 155943/2023 NYSCEF DOC. NO. 123 RECEIVED NYSCEF: 12/20/2023 Delivery apps generate revenue by charging fees to restaurants and consumers (except for Relay, which charges only restaurants). Delivery worker pay is the main cost they incur. Figure 2. Unit Economics of App Delivery in NYC, July 2021 – June 2022 ($) 33.09 18.33 30 20 4.11 2.11 3.06 8.54 4.32 10 5.48 4.22 Paid by Restaurant Tip Taxes Fees App share App Delivery Gross consumer share of charged to of order revenue worker margin order consumer subtotal pay subtotal Source: Department analysis of weekly aggregate data obtained from apps. Visualization adapted from Kabir Ahuja et al. 33 Figure 2 breaks down the amount paid by a consumer on an average order in NYC between July 2021 and June 2022. Moving left to right, the total cost to the consumer was $33.09, consisting of the $18.33 that went to the restaurant, $4.11 to the worker in tips, $2.11 in taxes, $3.06 in fees charged to the consumer by the app, and $5.48 that the app received as its share of the order subtotal (i.e., the app’s commission, usually taken by the app as a percentage of the order subtotal). App revenue ($8.54) is the sum of the consumer fees and this commission. Out of this, apps paid an average of $4.32 to the delivery worker, leaving a remainder of $4.22 as the app’s gross margin. Several insights emerge from this analysis. At $33.09, the total cost to the consumer is 39% more than the $23.81 order subtotal (represented in Figure 2 as the sum of the restaurant share of