Unveiling GrubHub’s Controversial Tactics: How Legal Loopholes Impacted Minimum Wage Payments

Deceptive Practices in Food Delivery?

A recent investigation has uncovered that Grubhub allegedly devised a plan to deprive its couriers of the minimum wage they are entitled to.

As reported by Streetsblog, in 2024, Grubhub began outsourcing a portion of its delivery orders to Relay, a delivery platform that is not subject to New York City’s delivery-app minimum wage regulations.

Legally, from 2024 onwards, couriers delivering for Grubhub were supposed to earn more than $19 per hour. However, due to Grubhub’s questionable maneuver, the couriers likely worked for Relay, earning just $13 an hour.

Streetsblog asserts that this strategy was employed by Grubhub to sidestep the worker protection laws in New York City.

An internal email sent to Grubhub’s tech workers and obtained by Streetsblog states:

“The partnership [with Relay] arises primarily to stem elevated driver pay costs in NYC, which have more than doubled since the new driver pay law was introduced.”

Passed in 2021, the aforementioned law forces app companies to pay their workers a guaranteed hourly rate.

The law initially required companies to pay delivery workers $17.96 an hour, which was raised to $19.96 in April 2025 and is now $21.44 per hour. This wage will continue to be adjusted annually for inflation.

This wage is intended to support and protect drivers who operate as private contractors and lack employee benefits such as health insurance or workers’ compensation.

Predictably, and with draconian flair, DoorDash, Uber, and Grubhub sued the city in an unsuccessful bid to stop the law.

However, Relay’s business model was deemed distinct enough for a judge to grant an injunction allowing the company to ignore the law, creating a legal loophole that Grubhub would ruthlessly exploit.

During this time, Grubhub workers were unceremoniously kicked off the app without explanation, a deactivation that led many to sign up for Relay, which paid its private contractors just $13.35 per hour, meaning they did the exact same work for considerably less pay.

To add insult to financial injustice, Relay workers were sent on longer trips, further violating the city’s worker protection laws.

This so-called “partnership” between Grubhub and Relay began in January 2024, and according to former Grubhub employees, 20 to 30 percent of orders were outsourced to Relay.

According to an internal email, Grubhub expected to save 39 percent on the cost of each order sent to Relay, amounting to around $5 million annually.

“Grubhub wanted to use Relay because they wouldn’t have to pay for the workers’ time. Since Relay was not subject to the pay standard, they could take advantage of free labor that way,” New School economist James Parrott, who helped write the minimum pay standard law, told Streetsblog. “It’s a pretty obvious move to sidetrack the pay requirement.”

But wait, it gets worse.

In November 2024, Grubhub and Relay were acquired by the startup Wonder.

Within months of the purchase, Grubhub laid off 20% of its workforce, and the loophole that allowed it to cheat its workers out of a fair wage closed, resulting in the company shuttering Relay in NYC, leaving thousands of delivery workers out of work.

Recently, Grubhub began a three-month test program that will deliver food by drone to customers in New Jersey.

The program uses Dexa’s DE-2020, a fully automated delivery aircraft designed to transport goods directly to customers’ homes, presumably putting even more couriers out of work.