DoorDash, Shifting Business Model, Will Offer Drivers Hourly Pay

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

A drastic change in compensation could answer concerns that some delivery workers aren’t being paid a fair wage. It could also add incentives for drivers to accept small orders that are not highly rewarding and are usually avoided.

DoorDash says drivers will be able to choose between earning per order (usually a few dollars in base salary plus miles driven) or a flat hourly rate.

Hourly rates only include active time, which is the time between taking an order and dropping it off, and does not include the time the driver waits for the next order. Driver can switch between his two payment methods. The tip will be applied in addition to the hourly base salary, the company said.

DoorDash, which employs gig workers for food and other deliveries, announced the change as part of DoorDash’s 10th anniversary product event, Dash Forward.

DoorDash said it added payment options because it wanted to give drivers more decision-making power in response to driver feedback.

“One of the things we hear a lot is about choice. The choice of when, where and how you make money is very important,” said Kodi, head of the company’s Dasher & Logistics team. Mr Augney said.

Gig workers’ ties to companies like DoorDash and Uber have come under scrutiny in recent years by regulators and labor activists. The biggest question is how these workers are classified and whether they are paid properly.

Gig drivers are typically independent contractors who pay their own expenses and do not receive the benefits of full-time employees. They have long complained that they are underpaid and sometimes exploited by companies.

DoorDash says drivers who choose to pay by the hour are likely to earn a similar amount to drivers who earn per delivery. The company says the minimum pay varies by region and ranges from $10 to $19.50 per hour.

This new payment method is similar to the 2020 California ballot measure “Proposition 22,” which gig companies backed and guaranteed a minimum wage and other limited benefits in exchange for not being able to classify drivers as employees.

But DoorDash said there is a big difference. Drivers can switch between hourly and pay per delivery as often as they like. The new system will not be used in California, Seattle or New York, where laws have been passed to set minimum wages for drivers.

Sergio Avedian, longtime driver and contributor rideshare guyA blog that gives tips to gig drivers says that the hourly wage option “gives drivers a little comfort zone.”

Avedian encourages drivers to turn down orders that are unlikely to offer a decent salary or good tip, but DoorDash’s use of hourly payments would have caused drivers to skip. He said it could be a way to get people to accept smaller deliveries.

“The key for the drivers is to push as many orders as possible, which may give them some peace of mind,” he said.

Doordash said drivers who accept whatever they are offered are disadvantaged by receiving disproportionately cheap deliveries, as some drivers reject less desirable orders. The company said the minimum hourly wage would help the group.