DoorDash, Shifting Business Model, Will Offer Drivers Hourly Pay

DoorDash said on Wednesday that it would begin giving its delivery drivers the option to be paid an hourly minimum wage, instead of earning money for each delivery.

The significant shift in compensation could be an answer to concerns that some delivery people are not paid fairly. It could also add an incentive for drivers to pick up smaller orders that don’t pay as well and that they would typically avoid.

Drivers will be able to choose whether they earn money for each order — usually a few dollars in base pay plus compensation for miles driven — or receive a flat hourly amount, DoorDash said.

The hourly rate includes only active time, meaning time between accepting and dropping off an order, and does not include the period when drivers are waiting for the next order. Drivers will be able to toggle between the two payment methods. Tips would be applied on top of the hourly base pay, the company said.

DoorDash, which uses gig workers to transport 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 is around choice: Choice of when, where and how they earn is really important,” said Cody Aughney, head of the company’s Dasher & Logistics team.

The relationship between gig workers and companies like DoorDash and Uber has been scrutinized in recent years by regulators and labor activists. The biggest questions have been over how those workers are classified and whether they are adequately paid.

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 exploited by the companies.

DoorDash said drivers who chose to be paid hourly and those earning money per delivery were likely to earn a similar amount. The minimum compensation will depend on the region and range from $10 to $19.50 per hour, the company said.

The new payment method is similar to Proposition 22, a 2020 California ballot measure that was backed by gig companies and guaranteed drivers a minimum wage and other limited benefits in exchange for precluding them from being classified as employees.

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

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

Mr. 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.

“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.

Because some drivers do decline less desirable orders, DoorDash said, those who accept everything they are offered receive a disproportionate number of those cheaper deliveries and are put at a disadvantage. Hourly minimum pay, the company said, will help that group.