The New York City Council, on September 23, 2021, approved a set of bills that could significantly affect the working conditions of hotel workers and delivery drivers.  City councilmembers and workers’ groups have cited difficult working conditions related to COVID-19 and extreme weather as reasons they claim the sweeping mandates are necessary.  While some of the bills address application-based delivery drivers specifically, others are broader and will also affect non application-based drivers and traditional third-party courier services. 

The following bills, passed overwhelmingly by the New York City Council, now will be sent to Mayor de Blasio for signing.  Given the mayor’s previously expressed support for the bills, it is expected that he will sign them into law. 

Severance Pay for Hotel Workers (Int. 2397-2021)

Requirement to Pay Severance.  Int. 2397-2021 would require operators of “transient hotels” to pay their employees severance pay if: (1) the hotel closed to the public and has not, by October 11, 2021, recalled at least 25% of the number of employees it employed as of March 1, 2020 and has not reopened to the public by November 1, 2021; or (2) the hotel underwent a mass layoff after March 1, 2020 that resulted in the loss of work by at least 75% of employees during any 30-day period.

Transient Hotel Coverage.  The bill would adopt the definition of a “transient hotel” found in Section 12-10 of the New York City zoning resolutions to determine whether a specific hotel is covered by this law.  The zoning resolution provides that a transient hotel is any building or part of a building in which: (a) living or sleeping accommodations are used primarily for transient occupancy, and may be rented on a daily basis; (b) one or more common entrances serve all such living or sleeping units; and (c) 24-hour desk service is provided, in addition to one or more of the following services: housekeeping, telephone, or bellhop service, or the furnishing or laundering of linens.

Employee Eligibility for Severance Pay.  Aside from working in a covered transient hotel, to be eligible for the severance payment, the hotel employee must have: (a) been employed by the hotel on March 1, 2020 for at least one year; (b) been employed to perform “hotel service”; (c) not been a managerial, supervisory or confidential employee who had the power to exercise control over the management of the hotel; and (d) been laid off after March 1, 2020 due to a closure or mass layoff.  The term “hotel service” is broadly defined as any work performed in connection with the operation of a hotel.  Severance payments would be owed to all laid-off hotel employees beginning on October 11, 2021, for up to 30 weeks in the amount of $500 per week, or up to a total of $15,000. The obligation to provide severance would end when an employee is recalled, or, for a closed hotel, when the hotel reopens to the public and recalls 25% of employees.

Any severance pay provided to a hotel employee prior to October 11, 2021 would not function as a set-off towards the obligations to pay severance to hotel employees after October 11, 2021; however, any severance payments made after October 11, 2021 (such as severance pay required by a collective bargaining agreement) would function as a set-off toward the severance pay obligations under this statute.

The requirement to pay severance pay would not apply to a hotel that has closed permanently and is in the process of converting to an alternative use, provided that the hotel employees were offered severance of at least 20 days’ pay per year of service and provided that the severance is specifically tied to the conversion.

Study and Rules Regarding Minimum Trip Payments to Third-Party Delivery Workers (Int. 2294-2021-A)

Publication of Study.  Worker advocacy groups have long called for the regulation of compensation received by delivery workers who work for third-party services, including those using software applications to assign jobs.  Bill number 2294-2021-A—the “Minimum Payment Bill”—would require the New York City Department of Consumer and Worker Protection (DCWP) to conduct a study considering, at minimum:

the pay food delivery workers receive and the methods by which such pay is determined, the total income food delivery workers earn, the expenses of such workers, the equipment required to perform their work, the hours of such workers, the average mileage of a trip, the mode of travel used by such workers, the safety conditions of such workers, and such other topics as the department deems appropriate.

Based on the results of the DCWP’s study, and no later than January 1, 2023, DCWP would be required to promulgate rules that “establish a method for determining the minimum payments that must be made to a food delivery worker by a third-party food delivery service or third-party courier service.”  The bill further authorizes DCWP to announce annual updates to the minimum payment requirement, starting February 1, 2024 and each year thereafter.

Promulgation of Rules.  The Minimum Payment Bill further provides that the rules promulgated by DCWP shall not prevent payments to food delivery workers from being calculated on an hourly or week basis, “or by any other method,” so long as the actual payments received by delivery workers comply with the minimum payment requirements set by the DCWP.  In addition, the bill specifies that any minimum payment set by the DCWP would not include gratuities, and that a third-party food delivery service or courier service would be prohibited from retaining any portion of drivers’ gratuities, or using drivers’ gratuities to off-set any portion of the minimum payments required by DCWP.

Subpoena Power.  The Minimum Payment Bill would empower DCWP to “request or issue subpoenas” for a wide category of information, including:

the production of data, documents, and other information from a third-party food delivery service or third-party courier service relating to food delivery workers that include, but are not limited to, worker identifiers, information about the times that such workers are available to work for such third-party food delivery service or third-party courier service, the mode of transportation such workers use, how trips are offered or assigned to food delivery workers, the data such service maintains relating to the trips of such workers, the compensation such workers receive from such third-party food delivery service or third-party courier service, any gratuities such workers receive, information relating to both completed and cancelled trips, agreements with or policies covering such workers, contact information of such workers, information relating to the setting of fees paid by food service establishments and consumers, and any other information deemed relevant by the department. 

The bill would require that such subpoenas be issued in accordance with applicable law and rules and with appropriate notice, without further details about how state law governing subpoenas will apply.

Notice to Patrons Regarding Delivery Drivers Tips (Int. 1846-2020)

Notice to Patrons. Once effective, Int. 1846-2020 would prohibit a “food delivery application” from soliciting a tip from a customer unless it discloses, “in plain language and in a conspicuous matter” the following information before or at the same time a gratuity is solicited:

• The amount or proportion of each gratuity that will be provided to the delivery worker; and
• How gratuities are distributed to a food delivery worker, including whether such gratuities are distributed immediately or otherwise, and whether such gratuities are distributed in cash or otherwise.

Notice to Food Delivery Workers.  The bill also would require that food delivery applications notify food delivery workers if a gratuity was added, the amount, and whether the customer removed it and why, if a reason was provided, or if a change was made.  Food delivery applications would further be required each day to inform the food delivery worker of the total compensation and gratuities earned by that worker the previous day.   

Recordkeeping Obligations.  Food delivery applications would be required to keep records “demonstrating their compliance” with the law, as part of the requirements of their licensure.

Effective Date.  This bill would go into effect 120 days after Bill No. 1897-2020-A, a separate bill proposed in 2020 that would impose licensing requirements on third-party food delivery services, takes effect.  Bill No. 1987-2020-A was enacted on September 26, 2021, thus making this bill effective on or around January 24, 2022.

Restrictions on Fees to Food Delivery Workers and Frequency of Pay Requirements (Int. 2296-2021-A)

Restriction of Fees.  Third-party food delivery services or third-party couriers would be prohibited from charging or imposing any fee on a food delivery worker for the use of any form of payment selected by such service to pay such worker for the work performed. 

Frequency of Pay.  The bill would require a third-party food delivery service or third-party courier service to pay a food delivery worker for work performed no less frequently than once a week.

Effective Date.  This bill would go into effect 180 days after becoming law. The DCWP may take such measures as are necessary for the implementation of this local law, including the promulgation of rules, before such date.

Setting Limitations on Distance and Routes for Delivery Workers (Int. 2289-2021-A)

Limitations on Distance/Routes.  Under Int. 2289-2021-A, food delivery workers must be given the ability to specify (a) the maximum distance per trip that the worker will travel, from a location selected by that worker; and (b) that the worker will not accept trips that require them to travel over any bridge or through any tunnel designated by that worker.  The workers must be allowed to change these limitations at any time.

In addition, employers would be required to disclose the following information to their food delivery workers before the worker accepts that trip: (a) the pick-up address; (b) the estimated time and distance for the trip; (c) the amount of gratuity, if specified by the consumer; and (d) the amount of compensation to be paid to the worker, excluding the gratuity.  This law would apply only to trips that originate, end, or involve the pick-up of food from an establishment in the city.

The bill would also protect food delivery workers from retaliation for exercising their rights under this law.

Notices/Recordkeeping. Employers would be required to provide food delivery workers with a notice informing them of the rights listed above.  The notice must be provided electronically and should be in English.  The notice must also be made available electronically in any language spoken as a primary language by 5% of the food delivery workers hired provided the notice has been made available in that language by the commissioner.  Employers must maintain the original records documenting their compliance with this law for three years and provide the department with access to those records in the event of an investigation.  

Effective Date.  This bill would go into effect 180 days after it is signed by the mayor. 

Providing Access to Restroom Facilities (Int. 2298-2021-A)

Food service establishments would be required to make their toilet facility available for the use of food delivery workers who are on the premises to pick up that establishment’s food or beverage for consumer delivery.  Notably, “food delivery workers” includes both employees and independent contractors who deliver food and beverages to consumers.  This requirement to make the toilet facility available does not apply if accessing the toilet requires the worker to walk through the kitchen, food preparation, storage or washing area, or if it would create an obvious health and safety risk to the food delivery worker or the employer. 

This bill would go into immediately upon signing. 

Providing Food Delivery Workers with Insulated Food Delivery Bags (Int. 2288-2021-A)

The law now requires that third-party food delivery/courier services provide an insulated food delivery bag to each food delivery worker who has completed at least six deliveries for that service.  This must be provided at the employer’s expense and not the worker’s.  An employer’s license may be denied, suspended, or revoked if it commits two or more violations of this requirement.

This bill would go into effect immediately upon signing. 

Limitations on Delivery Distance (Int. 2399-2021)

Int. 2399-2021 would grant delivery workers greater control over the length of their delivery routes.  The bill would allow delivery workers to set a maximum distance for travel per trip for delivering food, beverages or other goods provided by food service establishments.  The maximum distance would be calculated based on the distance from the food service establishment to the delivery destination.  If enacted into law, this bill would go into effect on the same dates as Int. 2288-A and Int. 2294-A.¹

Limitations on Third-Party Delivery Service Fees (Int. 2390-2021)

Int. 2390-2021 would greatly limit the fees that third-party food delivery services may charge food service establishments that use their platforms.  The bill would prohibit third-party food delivery services from charging food service establishments (a) more than 15% of the purchase price of each online order for delivery and (b) more than 5% in fees other than a delivery or transaction fee for the use of the service per order.  The bill carves out an exception for transaction fees, but would prohibit third-party food delivery services from charging more than 3% for such fees unless the delivery service can provide evidence that a higher fee rate was imposed by a credit card company or internet-based payment system.  This evidence must be provided to the DCWP and the affected food service establishment upon request.

Under the bill, the proposed cap on fees would be reviewed every two years beginning no later than September 30, 2023.  The DCWP would be required submit a report to the mayor and the speaker of the council recommending the maintenance or adjustment of the bill’s cap on fees.  Factors relevant to the maintenance or adjustment of the caps include:

• The effect of the cap on third-party food delivery services and food service establishments;
• Whether the cap affects delivery workers’ wages and working conditions;
• The products provided by third-party food delivery services for listing, processing and marketing;
• The number of complaints of violations;
• Total amount of penalties imposed; and
• The restitution recovered.

Conclusion

The foregoing bills, if approved by the mayor, would bring significant changes to the food delivery and hotel industries in New York City.  Affected employers should consult with knowledgeable employment law counsel to determine whether and how the foregoing laws should be implemented into their operations.