April 13, 2024

DoorDash said Wednesday that it will begin offering delivery drivers the option of making an hourly minimum wage instead of earning money per delivery.

The big shift in pay could be the answer to concerns that some delivery workers are being unfairly paid. It can also incentivize drivers to take small orders that don’t pay as much and would normally be avoided.

DoorDash says drivers will be able to choose whether to make money per order — typically a base salary of a few dollars plus compensation for miles driven — or receive a fixed hourly amount.

The hourly rate includes only active time, the time between an order being accepted and its delivery, and does not include the time a driver waits for the next order. Drivers will be able to switch between the two payment methods. Tips will be added to hourly base pay, the company said.

DoorDash uses gig workers to transport food and other goods, a change the company announced at Dash Forward, a product event marking DoorDash’s 10th anniversary.

DoorDash said the payment option was added in response to driver feedback, but also because it wanted to give drivers more decision-making power.

“One of the things we hear a lot is about choice: It’s important to choose when, where and how they make money,” said Cody Aughney, head of the firm’s Dasher & Logistics team.

Gig workers’ ties to companies like DoorDash and Uber have come under scrutiny from regulators and labor activists in recent years. The big question is how to classify these workers and whether they are paid enough.

Gig drivers are often independent contractors who are responsible for their own expenses and do not receive the same benefits as full-time employees. They have long complained that they are underpaid and sometimes exploited by their companies.

Drivers who choose to pay by the hour and those who make money per delivery are likely to make similar money, DoorDash said. The minimum pay will vary depending on the region, ranging from $10 to $19.50 an hour, the company said.

The new payments are similar to Proposition 22, a 2020 California ballot proposal that was backed by gig companies and guaranteed drivers a minimum wage and other limited benefits in exchange for not being classified as employees.

But DoorDash says there’s a big difference: Drivers can switch between hourly and pay-per-delivery payments as needed. The new system won’t be used in California, Seattle or New York, which have already passed minimum wage laws for drivers.

Sergio Avedian, a longtime driver and contributor CarpoolerA blog that offers advice to gig drivers says the hourly option “brings a little bit of comfort into the driver’s pocket”.

Arvidian, who encouraged drivers to turn down orders that were unlikely to offer a decent payday or a good tip, said paying by the hour could be a way for DoorDash to get them to accept small deliveries they would otherwise skip.

“For them, it’s about pushing as many orders as possible, and for drivers, it might give them some sense of security,” he said.

Because some drivers do turn down less-than-ideal orders, those who accept everything they’re offered receive a disproportionately cheaper delivery, DoorDash says, putting them at a disadvantage. The company said an hourly minimum wage would help that group.

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