Uber, Amazon and Instacart Seek to Block New York Law on Deactivating Delivery Workers
Key Facts
Uber Technologies, Amazon and Instacart have filed a federal lawsuit seeking to block a New York City law governing the deactivation of contracted delivery workers, Bloomberg Law reported. The law bars delivery services from deactivating a worker after a probationary period except for just cause, a genuine economic reason or when required by law, according to the City Council text. The companies said the law could cause them “immediate and irreparable harm” unless the court blocks it. The law takes effect on January 17, 2027, making the companies’ request concern rules nearing implementation. The city says the next step is to draft rules specifying how it will be enforced.
The law requires delivery companies to follow progressive disciplinary procedures before terminating a worker for just cause, except in cases of serious misconduct, and to notify the worker within 72 hours of deactivating the account. If deactivation is for genuine economic reasons, the company must provide 120 days’ advance notice. The law allows workers to seek an informal resolution or file a request with the Department of Consumer and Worker Protection for an investigation, though the department is not required to investigate. Remedies cited by the city include reinstating the worker and paying lost earnings. The department says it regularly receives complaints from workers who describe their accounts being deactivated arbitrarily and unfairly for reasons beyond their control.
Instacart says the restrictions could make it harder for platforms to enforce standards barring unsafe behavior, harassment, theft, fraud and misuse of customer information. The company says rules on reinstating accounts could require it to reactivate accounts it closed for safety or fraud-related reasons. It also warns that disclosing sensitive data could expose information that puts customers at risk or details about fraud-detection methods. In describing its current system, the company says workers are told why their accounts were deactivated and can appeal, with a person reviewing the final decision. Instacart said it sent the city frequently asked questions, including more than 50 questions about interpreting and enforcing the rules, and said it received no response and its attempts to propose alternatives before litigation were unsuccessful.
The complaint, according to Courthouse News coverage, relies on claims involving violations of the First and Fourteenth Amendments to the U.S. Constitution, as well as contract, free-speech and due-process provisions. The companies compare the delivery-worker law with another local law that restricts ride-hailing apps’ ability to deactivate drivers. In that case, a federal court on July 21, 2026, issued a preliminary injunction barring the city from enforcing Local Law 52 until further order. The court said the record did not establish the scale of erroneous deactivations and found the companies likely to succeed in showing that the law severely restricts their contracts. The ruling also cited the sector’s activity in the city: about 87,000 Uber and Lyft drivers completed more than 22 million trips in March 2026.
City data offer a parallel picture of the impact of pay rules on the delivery market: average hourly earnings, including tips, rose from $10.48 when enforcement began in December 2023 to $27.03 through June 2026. Average hourly pay for restaurant delivery workers also rose from $5.05 before the minimum wage took effect to $21.63 through June 2026. Over the same period, weekly restaurant delivery orders increased from 2.63 million in the third quarter of 2023 to 3.39 million in the second quarter of 2026, a 29% rise. The city said weekly consumer spending on restaurant delivery rose 46% between the two periods. Total weekly earnings for restaurant delivery workers rose from $19.5 million to $38.7 million.
The city reported that the share of time workers spent on trips rose from 44% to 78% of total working hours, while the number of orders completed per hour worked increased 68% through the second quarter of 2026. These figures are part of the city’s report on the impact of the minimum wage, while the companies’ lawsuit focuses on the restrictions the deactivation law places on their decisions about workers’ accounts. Instacart maintains that its ability to address safety and fraud risks and protect customer information is affected by how the law is interpreted and enforced. The lawsuit puts before the court a dispute over the limits of those restrictions before they take effect. The Department of Consumer and Worker Protection is set to draft the law’s implementing rules, while remedies cited by the city include reinstating workers and paying their lost earnings.