Last-mile delivery service DoorDash is raising fees on its customers and restaurant partners in New York City to offset the minimum wage increase recently imposed by the city, the company confirmed.
DoorDash informed New York City restaurateurs this month that it is raising the commission rate they pay for the delivery service.
The San Francisco-based tech company also said that the minimum wage hike to either $17.96 an hour or 50 cents per minute for its drivers, known as Dashers, is requiring the company to increase the fees customers pay as well.
DoorDash, Uber, and Grubhub sued to stop the wage hike last year, but in September, the New York Supreme Court blocked the tech companies’ challenge to the pay increase.
DoorDash spokesperson Eli Scheinholtz told Supermarket News in an email that the new customer fee is expected to be released in the coming weeks “to help balance the increased costs from this new minimum pay rate for everyone who uses the platform.”
While DoorDash declined to make public a memo sent to merchants in mid-January, Scheinholtz said that the effective commission rate “would be the lesser of their contracted rate and the city’s current limit on commissions (maximum of 23% on delivery orders and 8% on pick up orders).”
In June, DoorDash announced that it is giving all of its drivers the option to earn an hourly wage instead of receiving pay for each delivery.
The rate increase will only apply to restaurants for now, due to the narrow definitions stipulated in the minimum wage rule, according to Scheinholtz.
“In its final rule, the Department of Consumer and Worker Protection irrationally subjected companies that facilitate deliveries from restaurants and other businesses to this minimum pay rate, but exempted those that only do non-restaurant deliveries,” Scheinholtz said in an email. “That means two identical orders from the same local business, fulfilled using similar app-based technology, and delivered by the exact same person, are not regulated the same way under the agency’s rules.
“In addition to placing one company at a competitive disadvantage, this approach creates confusion for delivery workers – they’ll receive minimum pay protections for a delivery from a local business using the one platform but not receive any protections for a delivery of the exact same item from the exact same store using another platform.”