DoorDash is trying a new way of making deliveries — and it doesn't involve gig workers

• DoorDash has partnered with two companies to use hourly employees with benefits.
• That's a change for a delivery service that built its business on contractors who are paid per gig.
• One of the companies it's using says it offers "gig-work mentality with a career mindset."

DoorDash is experimenting with using employees with benefits — not just independent contractors — to make deliveries.

The delivery service is working with at least two local delivery providers, one in Austin, Texas, and another in Fresno, California, through its Local Commerce Service Partner Program. The local providers handle hiring the employees, but the orders that they fill come from DoorDash.

Websites for both companies say they are hiring W2 employees. That's a big change from the gig workers that DoorDash and other delivery services have largely built their businesses on.

Though small in scale, the partnerships represent a fundamentally different business model from the one that DoorDash has used to become one of the world's largest delivery services.

Since its founding in 2013, DoorDash has relied on independent contractors, who are generally paid for each delivery they complete and have more flexibility about when they work than traditional employees. Uber, Lyft, Instacart, and other delivery companies have also relied on gig workers to build their businesses, leading millions of people in the US into the gig economy.

But using employees who are paid hourly and work shifts of up to several hours at a time helps make sure DoorDash always has people on hand to make deliveries, a company spokesperson said.

"We remain committed to preserving and protecting the flexibility of independent work that the vast majority of Dashers prefer," a DoorDash spokesperson said, referring to the company's independent contractors.

"However, we also know there is a small subset of workers who prefer set schedules and the predictability of W2 work, which is why we're piloting LCSP in select markets to focus on maintaining healthy supply levels and supplement the handling of new and different types of orders," the spokesperson added.

LCSPs are local commerce service partners, or businesses that "operate their own delivery business and employ their own fleet of delivery associates who fulfill deliveries offered through the DoorDash platform," according to DoorDash's website.

One of the partner companies, Fresno Logistics, says on its website that it offers "high-quality logistics services to restaurants, grocery and convenience stores, and a variety of other businesses (e.g., retail) in the Fresno, CA area through the DoorDash Platform."

Fresno Logistics' website touts the benefits for potential hires, including a $16-an-hour wage, tips, reimbursement for miles driven while on the job, healthcare, and paid time off. While not a direct comparison, that's much more than some gig delivery workers take home: A UC Berkeley study this year found that many make less than minimum wage after accounting for expenses such as gas.

Austin-based LCSP One, meanwhile, says on its website that it pays W2 workers $13 an hour plus tips and a per-mile reimbursement of 10 cents. Full-time delivery employees work four 10-hour shifts scheduled Monday through Friday each week, while part-time workers must make at least 20 hours worth of deliveries, according to the website.

The home page of its website says that the company offers employees "gig-work mentality with a career mindset."

Fresno Logistics and LCSP One did not respond to requests for comment from Business Insider.

Gig workers lack many of the benefits and legal protections that employees get. Some gig workers have said that their pay has decreased over the last few years, especially compared to early 2020, when demand for the delivery of groceries, takeout food, and other goods rose.

Others have had their accounts on the delivery apps deactivated with little or no explanation. And some gig workers have pointed to performance metrics, such as the percentage of potential orders that they accept, saying that they make the work more like a traditional job.

Making deliveries as an employee could solve some of those problems by giving workers more predictable pay and reimbursing them for miles driven.

The amount delivery services pay gig workers has been going up in some cities, too. New York City and Seattle recently enacted laws meant to raise gig worker pay.

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