DoorDash, Uber Eats hike fees in blue state city over delivery app minimum pay law

Seattle residents face higher delivery bills from services like DoorDash, Instacart and Uber Eats after a new law took effect that requires minimum payments to app-based workers who drive for those platforms.

The Seattle City Council’s App-Based Worker Minimum Payment Ordinance took effect on Saturday and requires a minimum payment for workers based on the time worked and miles traveled for each offer. Companies must pay the greater of a minimum per-minute amount of $0.44 and a minimum per-mile amount of $0.74, or a minimum per-offer amount of $5.

The ordinance also establishes a right to upfront disclosures of offer information and to receipt and payment records, as well as a right to access the network platform without limitations other than those related to health and safety. It also confers a right to not be penalized for limiting availability or refusing offers and a right to cancel an offer with cause.

In response to the new requirements, app-based food and grocery delivery services that rely on so-called "gig workers" are raising their prices and curbing benefits to users because of the increased costs that result from compliance.

DOORDASH UPDATES TIPPING POLICY AFTER NYC PASSES MINIMUM WAGE LAW

Instacart will guarantee its shoppers the minimum amount under the Seattle law, which amounts to over $26 per hour, but is ending the availability of its heavy pay, peak earning times and instant cash-out to shoppers in Seattle because of the law’s requirements.

"Due to new regulations imposed by the Seattle City Council, we’re making several changes to how Instacart operates in Seattle," Instacart told FOX Business in a statement. "Some of these changes include reduced service options and pricing increases for customers, as well as pay changes for shoppers. As always, we will work to deliver the best customer and shopper experience despite the limitations put in place by the City Council, and we may need to make additional changes in response to these new set of laws."

INSTACART: WHAT TO KNOW ABOUT THE ONLINE GROCERY SERVICE

An Uber spokesperson said customers will face higher costs for ordering on the platform because of the new laws and that its modeling suggests it will result in a loss of hundreds of thousands of orders for small businesses in the Seattle area. They added that thousands of Uber and Uber Eats drivers will see work opportunities diminished.

"Uber supports and advocates for thoughtful earnings standards across the country that help all sides of the marketplace," an Uber spokesperson told FOX Business in a statement. "Unfortunately, this one more than doubles the fees consumers will have to pay which means fewer orders for businesses, and less opportunities for delivery workers."

UBER WILL PICK UP, DELIVER PREPAID ITEMS

DoorDash said in a press release, "Throughout this process, we warned the City that while well-intentioned, these extreme policy changes would have adverse effects on all members of our community – Dashers, merchants, and consumers."

The company said its drivers, whom it calls Dashers, will now earn at least $26.40 per hour before tips plus mileage for time on delivery.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

Consumers will also face a new regulatory response fee at checkout, and the company said changes around Dashers’ availability under the rules may mean they have to wait longer or receive fewer offers because more Dashers may be available at a given time.