The Delivery Protection Act (Int. 0518-2026) (the “Bill”) aims at regulating the “last mile” operations of distribution companies such as Amazon and FedEx. Now pending with the New York City Council, the Bill would forbid such companies from contracting with third-party delivery service providers (“DSPs”) and require them to hire delivery workers directly.
Currently, DSPs hire delivery workers as independent contractors and intermediate between them and the distribution companies. This arrangement allows the distribution companies to pass the costs of trucks, fuel, and, most importantly, personnel onto the DSP. Proponents of the Bill, including the International Brotherhood of Teamsters union (“Teamsters”), claim this practice allows for the exploitation of the workers, whose uniforms and trucks bear the logo of the distribution company, despite the indirect relationship.
If enacted, by requiring distribution companies to employ delivery workers directly rather than rely on DSPs or independent contractors, the Bill would create new legal and regulatory obligations for those companies.
Implications on Unionization and Joint Employer Status
Three concerns stand out for distribution companies doing business in New York City. The first is wage and hour compliance. If the Bill passes, distribution companies would bear responsibility for ensuring adherence to federal Fair Labor Standards Act requirements, as well as New York’s more stringent state and local wage laws. These include minimum wage, overtime pay, meal and rest break requirements, and accurate recordkeeping. This would be a tremendous undertaking for distribution companies, as the present arrangement allows them to rely on DSP-employed delivery workers without the strain of being accountable as their employer. Under the Delivery Protection Act, distribution companies could expose themselves to liability if they fail to properly adhere to applicable recordkeeping and pay laws for hundreds of their new employees.
Worker misclassification presents another significant concern. Companies transitioning from a DSP model must carefully evaluate the employment status of each worker to avoid liability under both the Fair Labor Standards Act and New York Labor Law, which impose penalties for misclassifying employees as independent contractors—including back-pay awards, tax assessments, and exposure to class or collective action litigation. Such findings may also trigger statutory liquidated damages and attorneys’ fees, compounding the financial risk for companies already navigating the operational burdens of the transition.
Perhaps most significantly from a labor relations perspective, direct employment of delivery workers would expose distribution companies to organizing campaigns under the National Labor Relations Act, potentially leading to collective bargaining obligations, work stoppages, and the negotiation of union contracts governing wages, benefits, and working conditions. Distribution companies would also face potential unfair labor practice charges before the National Labor Relations Board if they interfere with, restrain, or coerce employees in the exercise of their organizing rights. Failure to bargain in good faith with a certified union could expose companies to board-ordered remedies, including back-pay obligations and reinstatement of terminated workers. Moreover, the costs associated with protracted labor disputes—such as legal fees, operational disruptions from strikes or slowdowns, and the administrative burden of managing grievance and arbitration procedures—could substantially erode the economic efficiencies that the DSP model was originally designed to achieve.
What’s Next?
Prospects for pro-union and pro-worker legislation in New York City are strong given the current political landscape. The New York City Council is composed predominantly of Democratic members, many of whom have expressed support for labor-friendly initiatives and have historically aligned with union priorities. Mayor Zohran Mamdani has voiced support for the Bill and his administration has signaled a general willingness to use both legislative support and executive action to advance labor-friendly measures.
Given this alignment between the Council’s composition and the Mayor’s stated priorities, the Delivery Protection Act and similar pro-worker legislation face a favorable political environment for enactment. However, opposition from affected industries, potential legal challenges, and implementation concerns may influence the timeline and final form of any enacted legislation. It is not yet clear when the Council will advance this Bill to a vote.
Should you have any questions, please do not hesitate to contact the authors of this article, or any of the other attorneys in Broadfield’s Labor and Employment Group.
