DoorDash to shift business model to hourly pay

DoorDash is now giving its couriers the option to be paid an hourly minimum wage or the choice to earn money for each delivery, reports The New York Times. 

The online food-ordering and delivery-services company has shifted its compensation strategy in order to add an incentive for drivers to pick up smaller or less desirable orders they might typically avoid (if they don’t pay as well, for example). 

Longtime driver and contributor to The Rideshare Guy, a blog that provides tips to gig drivers, Sergio Avedian, said an hourly pay option “gives the drivers a little bit of a comfort zone.”

Avedian, who encourages drivers to decline orders that are unlikely to offer a decent payday or a good tip, said the hourly payment could be a way for DoorDash to get them to accept smaller deliveries they would have skipped, according to the Times.

“On their end, the point is to push as many orders as they can, and on the driver’s end, it may give them some security,” he said.

DoorDash is also changing its business model to hourly pay in order to answer concerns about drivers being paid fairly. This comes following the news of Instacart facing a lawsuit this past month around adjacent issues. 

The Instacart suit opened up the conversation about similar roles and whether or not drivers should be considered as contract employees, or full-time, or gain their money from tips, be paid hourly, etc. 

Related:DoorDash now offers SNAP capabilities

For now, DoorDash said drivers will be able to choose whether they earn money for each order (a few dollars base pay plus compensation for miles), or receive a flat hourly rate. The hourly rate, however, only includes active time and does not include the period when drivers are waiting for their next order. 

Drivers can toggle between the two options, and tips will be applied on top of the hourly base pay, DoorDash said. 

The company said the payment option addition was in response to driver feedback. “One of the things we’ve heard a lot is around choice: Choice of when, where, and how they [drivers] earn is really important,” said Cody Aughney, head of the company’s Dasher and logistics team.

DoorDash also said that drivers can switch between hourly and per-delivery pay as frequently as they want, however, the new system cannot be used in California, Seattle, or New York, which are areas that have passed laws governing minimum pay for drivers.