In a move that breaks new ground in the gig worker industry, DoorDash announced on Wednesday that it will provide delivery workers with the option to be paid a guaranteed hourly minimum rate instead of the traditional per-delivery payment model. This decision comes in response to a recent New York City mandate that requires app-based gig companies, including DoorDash, Lyft, and Uber, to ensure delivery workers receive a guaranteed minimum wage of $18 per hour.
While DoorDash presents this new offering as a means to offer flexibility while promoting reliable earnings, it is important to note that the hourly rate is not a conventional hourly wage. According to DoorDash, it is based on the time spent on a delivery, “from the moment [a worker accepts] an offer until it’s dropped off — plus 100% of tips.” The company clarified this in a blog post, stating, “We know there are Dashers who prioritize reliability in their earnings, who simply want to get on the road and dash with an exact, upfront idea of how much they’ll earn for the time it takes to complete an order. Earn by Time was developed precisely with those Dashers in mind.”
Historically, labor rights activists and gig workers have criticized DoorDash and similar companies for only compensating workers for active time spent on a delivery, neglecting to account for the time spent waiting for orders to come in. The NYC mandate requires companies to compensate workers for all the time they are connected to the app, addressing this concern.
The specific hourly minimum rate that DoorDash will offer its delivery workers, referred to as Dashers, remains undisclosed. However, the company assured that Dashers who opt for the hourly rate will earn approximately the same as they would when paid per delivery. DoorDash has been piloting this hourly pay model in select midsize and small cities across the United States and plans to expand it nationwide by the end of 2023.
Some gig workers have criticized DoorDash’s new offering, labeling it a “watered-down version of Prop 22 with restrictions.” They accuse DoorDash of using the allure of hourly pay to incentivize workers to accept less desirable orders that they would typically reject due to low base pay. Proposition 22, a ballot initiative passed in California in 2020 and upheld in appeals court in March 2023, allows companies like DoorDash to classify their workers as independent contractors rather than employees. However, neither California nor New York Dashers will have access to DoorDash’s new hourly rate due to their respective state legislated earnings standards.
To ensure transparency, DoorDash will display the guaranteed hourly rate to Dashers at the beginning of each trip, allowing them to have a clear understanding of their earnings potential. The company stated that it invested significantly to create a rewarding and valuable option for Dashers who prioritize consistency. While DoorDash denies any correlation between accepting more orders and receiving a higher hourly rate, it is worth noting that the company, along with Uber, Lyft, and other gig companies, has been known to reward workers who consistently accept trips and has faced criticism for penalizing those who do not.
Despite introducing the hourly wage option, DoorDash will still offer Dashers the traditional per-offer payment model, which displays the upfront guaranteed minimum amount they can expect to earn for each trip before accepting it. DoorDash did not specify the states and markets where the “earn by time” offer will be available.
Alongside the hourly wage announcement, DoorDash unveiled additional features designed to help Dashers maximize their earnings. One such feature is “dash along the way,” which allows workers to choose where they want to start fulfilling orders, potentially aligning with their regular commute routes to receive orders in those areas.
DoorDash also introduced post-checkout tipping, enabling customers to add a tip or supplement an existing one up to 30 days after a delivery. While tipping traditionally occurs at checkout, this option provides Dashers with an opportunity to earn a little extra for a job well done.
In an effort to prioritize the safety and well-being of Dashers, DoorDash launched a location sharing feature. This feature allows workers to share their location with up to five contacts, providing them with peace of mind during their deliveries.
As a gesture of appreciation to long-standing Dashers, DoorDash announced that it will grant a one-time gift of $10,000 to those who joined the platform in its early years, have completed over 10,000 deliveries, and are currently active on the platform. The company did not disclose the exact number of Dashers who meet these criteria.
DoorDash’s introduction of the hourly minimum rate option represents a significant step in finding a balance between flexibility and reliable earnings for gig workers. As the company expands this offering nationwide, it remains to be seen how Dashers will respond and whether it will truly address concerns regarding fair compensation and worker rights in the gig economy.
