DoorDash offers delivery workers an hourly rate, but there’s a catch

Image credit: DoorDash

DoorDash will give delivery workers the option to be paid a guaranteed minimum hourly rate instead of being paid per delivery, the company said Wednesday. The new option, a first in the gig industry, comes as DoorDash and other app-based gig companies like Lyft and Uber must pay New York City delivery workers a guaranteed minimum wage of $18 an hour.

While DoorDash has positioned this new offering as a way to maintain flexibility while promoting reliable earnings, the hourly rate is not actually an hourly rate. It is based on the time spent on a delivery, “from the moment [a worker accepts] an offer until it’s dropped — plus 100% of tip,” according to the company.

“We know that there are Dashers who prioritize reliability in their earnings, who simply want to hit the road and run with an accurate, up-front idea of ​​how much they’ll earn for the time it takes to complete an order,” it says in a blog post from DoorDash. “Earn by Time was developed with these Dashers in mind.”

Labor rights activists and gig workers have historically criticized DoorDash and other companies for only paying workers for time spent at a gig, or “active time,” because that doesn’t take into account time spent waiting for an order to come through. The NYC mandate requires companies to pay workers for all the time they spend connected to the app.

It’s not clear how much DoorDash will offer its Dashers (the term the company uses to describe its delivery workers) as a minimum hourly rate. DoorDash said that dashers using the hourly rate will earn about the same compared to earning per offer.

DoorDash has been testing this hourly wage model in some small to medium-sized cities across the U.S. and plans to roll it out nationwide by the end of 2023. Some gig workers are calling it a “watered-down version of Prop 22 with restrictions” and accusing DoorDash of trying to use baited by hourly wages to encourage workers to accept less desirable orders than they would normally reject for the low base wage.

Proposition 22 was a California ballot initiative that passed in 2020 and was upheld in the appeals court in March 2023. It allows companies like DoorDash to continue to classify their workers as independent contractors, rather than employees. Neither California nor New York Dashers will have access to the new hourly rate because they have their own statutory income standards.

The guaranteed hourly rate will be shown to Dashers at the start of a journey, so they will be able to see exactly how much they are earning per hour upon delivery. DoorDash said it “invested significantly” to create a “rewarding, valuable option for those Dashers who prioritize consistency when they roam.” In other words, Dashers who accept more orders are likely to see a higher hourly rate than those who don’t. DoorDash denies this, but the company, along with Uber, Lyft and other gig companies are known to reward workers who accept rides consistently, and they have been accused of punishing workers who don’t.

The traditional earn-per-offer option is still available to Dashers, where the pre-guaranteed minimum amount they can expect to earn on that ride will be displayed before they accept.

DoorDash did not say in which states and markets the “earn on time” offer will be available.

Alongside the hourly wage announcement, DoorDash included the launch of some new features designed to help Dashers maximize their earnings. For example, “dash along the road” allows workers to choose where they want to start fulfilling orders—perhaps along their regular commute—so they can receive orders at those locations.

DoorDash also introduced post-checkout tipping so customers can add a tip or add to an existing one up to 30 days after a delivery. Usually, customers tip at checkout, but this option gives Dashers the chance to earn a little more for a job well done.

To give Dashers peace of mind, DoorDash also launched a location sharing feature, which allows workers to share their location with up to five contacts.

As a final gesture to gig workers, DoorDash said it is giving a one-time $10,000 gift to Dashers who joined the platform in the early years, completed more than 10,000 deliveries and are still active on the platform today. The company did not say how many Dashers it actually has.

This article has been updated with more information from DoorDash.