We’ve covered how California Assembly Bill 5 (AB5) could potentially make all drivers employees, but as one reader pointed out, are delivery drivers actually being treated like employees right now? We had Dasher extraordinaire Dash Bridges address what could happen to delivery drivers (and Uber/Lyft drivers) if AB5 passes and is implemented.
Recently, we received an email from reader Scott asking if working for DoorDash was similar to being an employee. Specifically, Scott was wondering if the model DoorDash uses would be what Lyft/Uber could use to make drivers employees.
“DoorDash sounds a lot like I am an employee. They limit drivers, assign shifts, and if you dip* during your shift, you’re locked out until the next day. The pay, however, is good. I did 2 deliveries in 20 minutes and made $17. But they seem to be the closest example of what Uber/Lyft could become. ”
Would you be able to look into this and write an article about if (or if not) DoorDash is treating workers more like employees?
The answer to your question, Scott, like most matters involving life and law, is, “it’s complicated.”
Are Drivers and Dashers Already Employees?
Here’s how I feel like I’m an employee already:
1) I’m performing work central to the company’s mission. DoorDash exists to deliver food from restaurants to customers. My job? I deliver the food!
The San Francisco 49ers don’t hire an independent contractor as a linebacker, they put him on the team payroll. The intent of the independent contractor is to allow companies to hire someone for a job that’s outside their expertise.
I understand DoorDash (or the 49ers) hiring an independent contractor to install an office phone system. Neither company has the institutional expertise nor long-term goal to install phone systems. They don’t need a full-time employee for that purpose. See the difference?
2) DoorDash sets my rates. They determine how much I earn on each order, even so far as to calculate the customer tip into how much they’re obligated to pay. Although I have the ability to decline any individual order, that’s very different than the right to negotiate a long-term salary/wage.
Here’s how I feel like a non-employee:
1) I set my own schedule. I can work 100 hours per week, or zero, without notice. I also work the times and locations I choose, only constrained by regional availability.
2) My performance metrics are exceptionally loose. The standards to avoid deactivation require minimal professionalism.
We’ve seen many articles focus on challenges faced by Uber and Lyft drivers, all Independent Contractors (ICs) who don’t have access to the same benefits and protections as full-time employees. One of 2019’s biggest labor stories is the employment status of these drivers and other participants in the gig economy.
One major threat to the status quo is California’s Assembly Bill 5, aka AB5. If signed into law, this bill would reclassify ICs as employees, making them eligible for benefits like a minimum wage, overtime pay, vacation pay, paid parental leave, and more. In addition to Uber and Lyft, it would affect non-rideshare services as well, like DoorDash, Postmates, Amazon Flex, and employees in many other industries. Passage would fundamentally change the relationship between these companies and their (new) employees.
Imagine AB5 goes into effect and Dashers become employees. How would it change our work? Let’s review a few, including one less-common benefit that likely strikes fear in the hearts of DoorDash executives.
How AB5 Would Affect Minimum Wage
For companies with 26+ employees, California minimum wage is currently $12.00/hr, increasing to $13.00/hr on January 1, 2020. Dashers typically average comfortably more than that minimum, BUT we’re counting both DD payouts plus tips. Minimum wage laws require that DD pays you $13.00 – regardless of tips — for every hour you’re on the clock. So let’s take a look at how that will affect pay.
Here are my earnings from the first week of three recent months:
Now, if I take out the tips:
DoorDash will absolutely need to pay drivers more. Therefore, they’ll need to bring in additional money from customers. I’m curious to know if the way they increase their customer revenue is at the expense of tips. If they feel they need to charge higher delivery fees, maybe they’d de-emphasize tipping, as they don’t benefit.
While employees are subject to 1.5X overtime pay for weekly hours over 40, DoorDash could create a mandatory maximum of 35-40 hours/week, thus eliminating this expense.
Paid Time Off
Again, this law varies state to state, but California doesn’t require any paid time off stipulations. Furthermore, CA state law says vacation accrual can vary by job within a company, as long as it’s not based on a protected characteristic. In theory, DoorDash wouldn’t have to give you ANY vacation.
An HR-department’s nightmare, but DoorDash’s size would likely minimize such costs.
Do you think your local cable installer (assuming they’re an employee of the provider) has the option to decline an appointment? Not likely! As your direct employer, do you think DoorDash will tighten up your acceptance requirements? Unquestionably. Enjoy your standard-pay Friday night visit to Cheesecake Factory!
Eaze (cannabis delivery) employees are W2. When I delivered with Eaze, I gave my supervisor a general outline of the shifts I was available. For the most part, he accommodated me, though he didn’t have to. Additionally, I was expected to be at our starting point within 5 minutes of our scheduled start time and obligated to work until my appointed end time OR until the last delivery was complete, whichever came later. No bailing if orders were slow.
Speaking of Eaze and W2 employment for drivers, there’s another significant issue: mileage reimbursement.
Corporate Mileage Reimbursement, the Silent Killer?
When I drove for Eaze, I noted a hidden bonanza for drivers. Although I earned a flat $15.00/hour + cash tips, Eaze was also on the hook for mileage reimbursement. Assuming DoorDash wouldn’t offer their own cars for Dashers, the 2019 reimbursement rate for self-driving is $0.58/mile. That amount is independent of your hourly pay/tips.
My records suggest I drive about 15 miles every hour for DoorDash. That’s $8.70, untaxed, on top of your other earnings. That law is GREAT for us, terrible for DoorDash.
How Would Orders Change?
DoorDash’s costs will certainly increase. How might your deliveries change with these new circumstances? As we’ve learned:
- Labor isn’t particularly expensive.
- Mileage is extremely expensive.
- DoorDash earns money on a 25-30% cut of the restaurant meal value, plus customer fees.
You will continue to see:
- The 2-mile round trip, $10 value Taco Bell order. Although DD won’t earn much on their cut of the $10 order, the minimal mileage expense should keep these orders modestly profitable.
- The 10-mile round trip, $75 value California Pizza Kitchen order. The lucrative cut of the meal value more than pays for the mileage expense. Furthermore, a customer paying $75 for their meal is likely to provide a tip, contributing to your take home. Again, minimum wage isn’t a huge concern, so if it takes you 45 minutes to complete, well, sit back and scroll some Twitter.
- Long-distance, low-value orders. You know, those forgettable ‘filler’ orders we all get. Those 8-mile, $16 orders of 4 ice cream sandwiches delivered to kids in the nice part of town? The ones that make you think, “Technology is incredible! Through my phone I can receive an order to pick up four frozen items, deliver them across town to people I’ve never met, and the company, customers and I will all benefit?” Then you think, “Oh, collectively we probably melted a square meter of Arctic Ice doing it.” These orders will be even less profitable than before, and will likely incur restrictions or additional delivery fees to make the numbers work.
Interested in California AB5? You can follow its progress here.
Basically, we’re all waiting to see what happens with AB5, how hard Uber/Lyft and other companies fight against it, and what it will mean for the on-demand industry as a whole. It’s difficult to say at this moment how ‘becoming an employee’ will look, as much of driver pay, scheduling and benefits will depend on what the companies do. For now, they’re staying quiet on this topic (no doubt hoping AB5 crashes and burns).
Drivers, what do you think will happen to drivers and Dashers if AB5 passes? Are you concerned about AB5?
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-Dash @ RSG