DoorDash, shifting business model, offers drivers an hourly wage
DoorDash said Wednesday it would begin giving its delivery drivers the option of being paid a minimum hourly wage, rather than making money for each delivery.
The significant shift in compensation could be an answer to concerns that some delivery drivers are not being paid fairly. It could also be an incentive for drivers to pick up smaller orders that don’t pay as well and that they would normally avoid.
Drivers can choose whether to earn money for each order — usually a few dollars of base salary plus mileage compensation — or receive a flat hourly fee, DoorDash said.
The hourly rate only includes active time, i.e. the time between accepting and delivering an order, and not the period that drivers wait for the next order. Drivers can switch between the two payment methods. Tips would be applied in addition to base hourly pay, the company said.
DoorDash, which uses gig workers to transport food and other deliveries, announced the change as part of Dash Forward, a product event marking DoorDash’s 10th anniversary.
DoorDash said it added the payment option in response to driver feedback and because it wanted to give drivers more decision-making power.
“One of the things we’ve heard a lot is about choice: choice of when, where and how they earn is very important,” says Cody Aughney, head of the company’s Dasher & Logistics team.
The relationship between gig workers and companies like DoorDash and Uber has come under scrutiny from regulators and labor activists in recent years. The biggest questions were about how those workers are classified and whether they are paid adequately.
Gig drivers are usually independent contractors who are responsible for their own expenses and do not receive benefits like full-time employees. They have long complained that they are underpaid and sometimes exploited by the companies.
DoorDash said drivers who chose to be paid by the hour and those who made money per delivery were likely to earn a similar amount. The minimum compensation depends on the region and ranges from $10 to $19.50 per hour, the company said.
The new payment method is similar to Proposition 22, a 2020 California ballot measure backed by gig companies that guaranteed drivers a minimum wage and other limited benefits in exchange for avoiding being classified as employees.
But DoorDash said there was a big difference: Drivers can switch between hourly pay and pay-per-delivery as often as they like. The new system will not be used in California, Seattle or New York – areas that have passed laws regulating minimum wages for drivers.
Sergio Avedian, a longtime driver and contributor to The Rideshare Guy, a blog that provides tips to gig drivers, said an hourly wage option “gives the drivers a bit of a comfort zone.”
Mr Avedian, who encourages drivers to reject orders that are unlikely to get a decent payday or a good tip, said the hourly payment could be a way for DoorDash to get them to accept smaller deliveries they would otherwise have skipped .
“On their side, it’s about pushing through as many orders as possible, and on the driver’s side, it can give them some reassurance,” he said.
Because some drivers refuse less desirable orders, DoorDash said, those who accept whatever is offered to them get a disproportionate amount of those cheaper deliveries and are disadvantaged. The hourly minimum wage, the company said, will help that group.