DoorDash raises fees for NYC deliveries after warning that a new minimum wage law would hit customers

• DoorDash started charging New York City customers a new fee on Thursday, the company said.
• The $1.99 fee is a response to NYC's new minimum wage law.

DoorDash followed through with its claim that delivery orders in New York City would be hit with increased fees.

All customers placing orders in New York City will start seeing that fee on Thursday in response to new minimum wage rules in the city, a DoorDash spokesperson confirmed to Business Insider.

The Regulatory Response Fee is in place to offset the increased hourly wage that app-based delivery drivers make in major cities like NYC and Seattle.

DoorDash warned customers that fees would increase due to these rules. It looks like New Yorkers are officially paying the price, along with Seattle residents who have been subject to a similar fee in recent weeks.

The specific amount of the flat fee varies based on the area, but it can range from $0.10 to $3.40. In NYC the fee is $1.99, DoorDash said.

In December, delivery apps eliminated the option for NYC customers to tip before placing their order after the city required drivers to make at least $17.96 an hour. Instead, DoorDash and Uber Eats opted to pay drivers $29.93 for every active hour and give customers to option to tip only after their order has been picked up or completed.

Referring to the Regulatory Response Fee in Seattle, DoorDash said in a statement on January 13 that it helped "cover the costs of these new regulations. The statement was issued the same day that Seattle's law took effect.

"In order to better balance the impact of these new costs and provide the best experience for consumers, we're also reducing the suggested tip amounts on each order," DoorDash's statement said.

Uber Eats has added similar fees to orders in New York and Seattle with the advent of those cities' laws. Meanwhile, Target-owned delivery service Shipt suspended its operations in Seattle before it had to start paying its independent contractors the higher rate.

Workers for gig delivery services have told BI that pay has declined on apps from Instacart to Walmart Spark since the early pandemic.

Do you work for DoorDash, Instacart, Walmart Spark, or another gig delivery service and have a story idea to share? Reach out to these reporters at jhart@businessinsider.com and abitter@businessinsider.com