(Bloomberg) -- Uber Technologies Inc., DoorDash Inc. and Grubhub Inc. will have to pay New York food delivery workers at least $17.96 an hour after they failed to convince an appeals court to block the minimum pay rule. 

A state appeals court on Thursday rejected efforts by the companies to overturn a September decision by a judge allowing the rule to go into effect. It had been temporarily delayed pending the decision. The ruling forces delivery services to either pay couriers the flat hourly rate or pay per delivery at about 50 cents a minute.

The pay increase is one of several measures New York and other large cities have taken to regulate apps for ridesharing, food deliveries and short-term rentals as usage has grown. Companies sought to block such measures, including challenges to a cap on commissions they can collect from restaurants and a requirement that they share customer data with restaurants they serve. 

Mayor Eric Adams called the city’s rule “a powerful tool to hold apps accountable.” In a statement, Adams said, “This minimum pay rate will guarantee our delivery workers and their families can earn a living and keep our city’s legendary restaurant industry going strong.” 

‘Eliminates Jobs’

The three companies didn’t say whether the entire cost of the new rule will be passed on to New York consumers, but Josh Gold, Uber’s senior director of public policy and communications, said the higher wage “eliminates jobs, discourages tipping, and forces couriers to go faster and accept more trips.”

DoorDash had warned city policymakers that it would have to make significant operational changes to its platform to comply with the minimum rate, without further elaborating on the changes that will be introduced in the coming months.

“The sad truth is that the court has chosen to ignore the harmful consequences such a misguided minimum pay rule will cause,” a DoorDash spokesperson said in response to the decision. “We will continue to explore all paths forward to ensure these minimum pay rules work for everyone who uses these platforms in New York City.” 

A Grubhub spokesperson said the company was “disappointed with the judge’s decision and are evaluating our next steps.”

The new law also provides for a second raise to almost $20 an hour in April 2025 for the approximately 60,000 app delivery workers in the city, who are currently paid about $11 an hour after tips and expenses. The city’s minimum wage is $15 an hour. The rule was originally passed in June, following a set of bills enacted in September 2021 by the city to grant sweeping protections to food couriers.

The cases are Uber Technologies Inc. v. New York City Department of Consumer and Worker Protection, 155943/2023, and DoorDash Inc. and Grubhub Inc. v. New York City Department of Consumer and Worker Protection, 155947/2023, New York State Supreme Court, New York County (Manhattan).

--With assistance from Natalie Lung.

(Updates with comments from the companies.)

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