Uber is not happy with Seattle’s lawmakers — and it’s showing up on customer receipts for food delivery orders.
The company announced this week that it is jacking up delivery fees for Uber Eats in response to new worker legislation that is set to take effect this weekend in Seattle.
The law, originally passed in May 2022, sets a minimum wage and other benefits for gig workers who deliver meals, groceries and packages. It was the first of several unique “PayUp” gig worker protection laws approved recently in Seattle.
Uber Eats customers in Seattle will see a new $5 fee for any order, described as a “Local Operating Fee” that “helps offset the increased cost of regulations imposed on third-party delivery apps.”
That’s in addition to a “Service Fee” attached to every order, which appears to have increased.
I checked my Uber Eats app on Friday to see how much more customers will now pay.
In September I was charged $44.90 for a gyro delivery, and an additional $8.47 in service and delivery fees, before tip and tax.
The same order today is also $44.90 for the food — which, by the way, is about 20% more than what the restaurant charges in-store — but now has $18.27 in fees. That’s more than double from September.
Uber also told GeekWIre that it is shutting down its Uber Connect same-day package delivery service in Seattle “in order to ensure compliance with the new law.”
It’s clear that Uber is sending a message to Seattle’s labor policy staff.
“The City of Seattle did not pursue balanced legislation and we disagree with their approach,” Uber told customers this week. “These rules will instead lead to higher prices for consumers, fewer orders to restaurants and fewer work opportunities for delivery drivers.”
Uber said the minimum wage policy will result in a loss of “hundreds of thousands” of orders for small businesses and “will price out Seattleites from access to this service.”
Uber also said it is removing its upfront tipping feature for Uber Eats orders in Seattle and will only allow customers to tip after an order is completed. The company said this can curb “tip-baiting” delivery workers to cherry-pick orders that have the highest upfront tip; sometimes customers reduce or eliminate the tip once their order is delivered.
Tips are not counted toward minimum payment, according to the minimum wage legislation. The city calculates minimum wage with a per-minute and per-mile floor for the engaged time necessary to perform work.
“The City intends to address the inequities of app-based work by ensuring that such workers earn at least the City’s minimum wage plus reasonable expenses, receive transparent information on job offers and pay, and exercise the flexibility promised by network companies,” the legislation reads.
Seattle’s minimum wage is the highest in the country among large cities at $19.97 per hour for large employers.
Uber reported revenue of $16.1 billion for its delivery unit — which includes Uber Eats — in the third quarter of 2023, up 18% year-over-year, and accounting for about half of the company’s total revenue.
Update: Instacart issued a blog post Friday, saying it is also adding new fees for customers and reducing service operation footprint “as a result of the significant increase in operating costs under this regulation.” The grocery delivery giant says it is required to pay shoppers at least $26 per hour while they fulfill orders. As a result it is discontinuing a shopper program called Instant Cashout.
Update: DoorDash confirmed that it is also making changes to its pricing structure. “There are consequences to bad policy,” a spokesperson said.
The “PayUp” legislation was spearheaded by former Seattle city councilmembers Lisa Herbold and Andrew Lewis; both are no longer on the council. Herbold did not run for reelection in November, and Lewis narrowly lost his District 7 seat to Bob Kettle.
Other “PayUp” mandates include an ordinance related to the worker deactivation process and a 10-cent per-order fee approved in November that will help pay for the implementation and enforcement of the “PayUp” laws. Seattle also passed a sick leave law for delivery workers last year.
New York City last year passed its own minimum wage law for gig workers. “Seattle is paving the way for the next generation of workers rights laws,” Herbold wrote in an editorial for The Stranger last year.
We’ve reached out to the City of Seattle for comment. Update: Here’s a statement from Steven Marchese, director of Seattle’s Office of Labor Standards:
“Seattle’s App-Based Worker Minimum Payment Ordinance and App-Based Worker Paid Sick and Safe Time Ordinance address the lack of sick leave access and subminimum wages that gig workers have faced for many years. In addition, these policies fuel our city’s economic engine by providing crucial guarantees like minimum payment, paid sick and safe time leave, transparency and flexibility. The laws do not mandate any increase to customers’ prices. The ordinances require that covered network companies pay app-based or “gig” workers, including delivery workers, minimum compensation and provide paid sick and safe time. Companies are free to decide if and how to address any increased labor costs, for example by adjusting the commission percentage they take on each order or raising prices for consumers. These laws go beyond app-based/gig workers, establishing a ripple effect to improve conditions for all, demonstrating Seattle’s commitment to a just and equitable economy and strengthening Seattle’s position as a national leader in worker protections.”
Members of the Washington Alliance for Innovation and Independent Work spoke out against the minimum wage law.
“The outgoing council prided itself on being the first to implement these standards, but from a practical perspective, they are untested and unrealistic for retailers and delivery workers, and will result in cost increases for customers,” said Tammie Hetrick, CEO of the Washington Food Industry Association, in a statement this week. “While we will have to wait to see the full results, it’s clear that this policy could make delivery services prohibitively expensive for those who utilize them most.”
Last month, Target-owned delivery service Shipt said it was pausing operations in Seattle due to the recently passed labor laws.
For many delivery drivers, the work represents their primary income. Among gig platform workers, 31% said it was their main job, while 68% said it was a side job, according to a 2021 study by Pew Research Center.
A study from the Economic Policy Institute released in 2022 found that gig workers “often are paid low wages, in some instances less than the minimum wage; they face economic insecurity at high rates; and they routinely report losing earnings because of technical difficulties with digital platforms.”
A new rule announced this month by the U.S. Labor Department could make it easier for independent contractors to be considered employees — which would provide benefits and other protections.
Story updated with information from Instacart and DoorDash.
