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

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

While DoorDash has positioned this new offering as a way to maintain flexibility while also promoting reliable earnings, the hourly rate isn’t really an hourly rate. It’s 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,” according to the company.

“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,” reads a blog post from DoorDash. “Earn by Time was developed precisely with those Dashers in mind.”

Labor rights activists and gig workers have historically criticized DoorDash and other companies for only paying workers for time spent on a gig, or “active time,” because that doesn’t account for time spent waiting for an order to come through. The NYC mandate requires companies to pay workers for all of 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 an hourly minimum rate, and the company did not respond in time to TechCrunch’s request for comment.

DoorDash has been testing this hourly pay model in some small to mid-size cities across the U.S. Some gig workers are calling it a “watered down version of Prop 22 with restrictions” and accusing DoorDash of attempting to use the bait of hourly pay to incentivize workers to accept less desirable orders that they’d normally reject for the low base pay.

Proposition 22 was a ballot initiative in California that passed in 2020, and upheld in appeals court in March 2023, and allows companies like DoorDash to continue classifying its workers as independent contractors, rather than employees.

The guaranteed hourly rate will be shown to Dashers at the start of a trip, so they’ll be able to see exactly how much they’ll earn per hour on delivery. DoorDash said it “invested significantly” to create a “rewarding, valuable option for those Dashers who prioritize consistency when dashing.” In other words, Dashers who accept more orders will likely see a higher hourly rate than those who do not. DoorDash, Uber and other gig companies are well known for rewarding workers who accept trips consistently, and they have been accused of punishing workers who don’t.

The traditional option to earn per offer is still available to Dashers, wherein the upfront guaranteed minimum amount that they can expect to earn on that trip will be shown before accepting.

DoorDash didn’t say in which states and markets the “earn by 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 way” allows workers to select where they want to start fulfilling orders — perhaps along their regular commute — so they can receive orders in those locations.

DoorDash also introduced post-checkout tipping, so that 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 lets workers share their location with up to five contacts.

As a final bone thrown to gig workers, DoorDash said it is giving a one-time gift of $10,000 to Dashers who joined the platform in the early years, have completed more than 10,000 deliveries and are still active on the platform today. The company didn’t say how many Dashers that actually amounts to.

DoorDash offers delivery workers hourly rate, but there’s a catch by Rebecca Bellan originally published on TechCrunch