DoorDash, changing the business model, will offer drivers hourly wages

DoorDash said Wednesday that it will begin giving delivery drivers the option of paying minimum hourly wages, rather than earning money for each delivery.

A big shift in compensation could be an answer to concerns that some delivery workers are not being paid a fair wage. It could also add incentive for drivers to also pick up small non-paying orders that they would normally avoid.

Doordach said drivers will be able to choose whether they earn money per order — usually a few dollars in base pay plus compensation for the miles flown — or receive a flat hourly rate.

The hourly rate includes active time only, which means the time between accepting an order and dropping it off, and does not include the period for which drivers wait for the next order. Drivers will be able to switch between the two payment methods. The company said tips will be applied in addition to the basic hourly wage.

DoorDash, which uses gig workers to haul food and other deliveries, announced the change as part of Dash Forward, a product event marking DoorDash’s 10th anniversary.

DoorDash said it was adding 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 about choice: choosing when, where and how to earn is really important,” said Cody Aughney, the company’s president of the Dasher & Logistics team.

The relationship between temporary service workers and companies like DoorDash and Uber has been scrutinized in recent years by labor organizers and activists. The biggest questions were how these workers would be categorized and whether they were being 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 taken advantage of by companies.

DoorDash said drivers who choose to be paid by the hour and those who earn cash per delivery are likely to earn a similar amount. The company said the minimum compensation will depend on the region and range from $10 to $19.50 an hour.

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 preventing them from being classified as employees.

But DoorDash said there’s a big difference: Drivers can switch between hourly and per-delivery pay as often as they want. The new system will not be used in the states of California, Seattle or New York – areas that have passed laws governing minimum wages for drivers.

The hourly pay option “gives drivers a bit of a comfort zone,” said Sergio Avidian, a longtime driver and contributor to The Rideshare Guy, a blog that offers tips for party drivers.

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

“From their point of view, the goal is to drive as many orders as possible, and at the end of the day, that might give them some security,” he said.

Because some drivers turn down less desirable requests, DoorDash said, those who accept whatever is offered receive a disproportionate number of those cheaper rides and are at a disadvantage. The company said minimum hourly wages would help that group.