NYC’s New Regulations on App-Based Businesses Illustrates the Shifting Rules Surrounding New and Evolving Worker Types

Here at the nextSource blog, we’ve been covering the regulatory issues surrounding gig economy companies like Uber and similar app-based business models.  Past coverage focused mostly on the ongoing legal debate over whether drivers, delivery persons and other app-based workforce elements were best classified as 1099 contractors (what the platform providers claim to be the case) or W2, wage earning employees (the position held by labor activists).  For the most part, it seems fairly settled by the courts that this relatively new worker type should be classified as an Independent Contractor.  However, even if app-based workers are considered contractors in the eyes of the law (and the IRS), there are still important workers’ rights issues being fiercely debated.

Case in point, the City of New York recently passed a bunch of legislation designed to protect the rights of workers at app-based companies like Uber Eats, GrubHub, DoorDash and others.   These services have been super important to denizens of the Big Apple during the time of pandemic when regular restaurants are either closed or operating at reduced capacity.  City leaders crafted the new regulations to ensure these workers are being protected, even if they are considered ICs for tax purposes.

City councilwoman Calina Rivera, a sponsor of the new legislation told Bloomberg News, “Delivery workers have worked tirelessly throughout this pandemic risking their lives, their livelihoods.” More than 65,000 food-delivery drivers are working in the five boroughs that make up New York City and were considered essential workers during the earliest days of the pandemic lockdown.  Yet, as Independent Contractors, these workers are not eligible for minimum wage protection, overtime or other benefits afforded to their W2 counterparts. 

All this, according to the New York City Council is why this special class of workers deserve some additional protection from exploitation.  The newly enacted measures focus on simple workplace basics such as access to restrooms.  The new regs require restaurants operating in New York City to provide access to restrooms to all couriers/delivery persons.

Other facets of the new law focus on financial protections for drivers and couriers.  For example, platform services like GrubHub, DoorDash and others are now required to pay their delivery people once per week and must offer payment options for workers who do not have access to banking services or who do not have a bank account.  Since tips are part of the compensation for delivery drivers (like their waiter/waitress counterparts), the new rules set minimum per-trip payments and guarantee the drivers receive the full tip awarded by the customer.  Additionally, the application platform companies are now forbidden from charging fees in order to deliver couriers’ earnings. 

Although this set of rules only applies to the City of New York, it highlights the newness of this business model and worker type, and the degree to which laws, rules and regulations may differ widely across different cities and states.  It is precisely for reasons like this that nextSource is a valuable partner and resource for companies of all kinds to ensure they remain in compliance with all applicable labor laws and regulations.