DoorDash Will Offer Drivers Hourly Pay, in Major Change to Platform

A Doordash courier rides his bike in the rain during the COVID-19 pandemic in Manhattan, New York on Nov. 13, 2020. (Carlo Allegri/Reuters)

DoorDash will offer its drivers guaranteed hourly pay on top of tips, providing its delivery workers another way to earn money, as part of a series of changes to its platform.

The delivery app’s main competitor, Uber Eats, already pays its workers for every pickup and delivery that is successfully completed, along with a per-mile pay rate. In some U.S. cities, Uber Eats deliverymen can also receive a per-minute rate.

DoorDash announced the change as part of Dash Forward, a product event marking DoorDash’s 10th anniversary.

The “earn by time” option will offer hourly minimum pay for the time spent on making deliveries, to provide better incentives to its workers to do smaller deliveries they would have skipped or found to be undesirable.

DoorDash Improves Pay Options

Like Uber, DoorDash uses so-called “gig” workers to transport food and other packages, but many have long complained about being underpaid and sometimes exploited by their employers.

The app-based delivery workers are independent contractors who are responsible for their own expenses and do not receive benefits like full-time employees.

These couriers, whom DoorDash calls “Dashers,” will now be allowed to keep 100 percent of tips from customers, according to the company on June 26.

The guaranteed hourly rate is offered to delivery workers when they accept an order, starting a timer that stops when a package is dropped off.

The hourly rate will differ depending on the market and will be prorated, Cody Aughney, DoorDash’s head of dasher and logistics business teams, told Engadget.

“The Earn by Time hourly rate is calculated based on a minimum hourly wage (usually the local minimum wage unless it is below $10 an hour) in addition to taking into account the local demand in real time,” he said.

DoorDash will also release a location-sharing feature that lets delivery workers share their real-time location with up to five contacts.

This will enhance safety measures for couriers as they go on their delivery routes, so friends and family members can track their location and call for emergency assistance if required.

It is another addition to the app’s existing safety features, such as informing customers to turn on household lights when expecting an order and providing a way for couriers to leave hostile customers without consequences.

Another new feature is called “Dash Along the Way,” which allows delivery workers to pick an order on the way to deliver to “maximize their earnings potential.”

The company also provided a new tipping option that lets customers add a tip, or boost the one they’ve already given after checkout, 30 days after delivery.

This should hopefully remind shoppers to properly tip their couriers.

Aughney told Yahoo Finance that this new program is intended to provide consistent pay for delivery workers.

However, the delivery app’s existing “earn per offer” plan, which pays delivery workers depending on the estimated duration, distance and “desirability” of the order, along with tips and potentially promotional payments, will still remain in place.

Couriers will be able to choose whether they want to be paid by time or per order for each delivery and will see the minimum payment they will get before selecting either option.

Feds, Local Governments Push For Better Treatment For Couriers

While the delivery app is making the changes, national and local governments are cracking down on delivery companies over employee pay and benefits.

The Federal Trade Commission said last December it would “use its full authority” to “protect these workers from unfair, deceptive, and anticompetitive practices.”

New York City, for example, is boosting its minimum wage for app-based restaurant delivery workers next month.

The NYC Department of Consumer and Worker Protection announced that the new minimum pay rate of at least $17.96 per hour would be effective immediately on July 12.

That is roughly $0.30 per minute, not including tips.

For apps that only pay for the period for when a courier picks up and drops off a delivery, the employee must earn at least approximately $0.50 per minute of trip time, not including tips.

A DoorDash spokesperson said the new pay option was not created in response to “specific policies in specific cities or states” and will not be available in NYC, or in “any market with earning standard legislations.”

The spokesperson said that the feature “avoids the pitfalls of the NYC earnings standard and gets the balance right, it allows dashers the choice to earn a guaranteed hourly rate, without removing flexibility or harming dashers, consumers and merchants.”

Users Will Also See New Options On Their Apps

Meanwhile, users will get new updates on their app, like a new search option that lets you look for items across restaurants, grocery stores, and retail locations.

A new Browse tab will let customers review categories of food, drinks, pet supplies, beauty products, and other products in order to browse before making a purchase.

DoorDash will also provide a multiple cart option, which can be filled with different products.

Users will now be allowed to save their progress each time while shopping, which could come in handy when planning to make future orders during the week.

The app delivery service will now accept SNAP/EBT online payments at more than 4,000 grocery locations nationwide and supported stores, including Aldi, Safeway, Meijer, and 7-Eleven.

DoorDash will also offer SNAP recipients two months of free DashPass access.

DoorDash, in its first quarter letter to shareholders, said that delivering orders for the company “remains misunderstood and the subject of misinformation in some quarters, as many people struggle to assess the value of something that does not fit their existing notions.”

“Regardless of one’s perception of work, its purpose is to help people achieve certain financial goals and live fulfilling lives,” the company added.

“Dashing seems to help millions of people with this. We hope pundits and policymakers looking to shape future policies around work consider what Dashers say and do, the value of choice, and the goal of supporting individuals and families in achieving their goals,” they said.

All of the changes will be rolled out throughout the United States by the end of 2023, said DoorDash executives.