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DoorDash Launches Benefits Program for Pennsylvania Delivery Drivers

In Technology
April 03, 2024

(Bloomberg) — DoorDash Inc. is testing a new portable benefits program for its delivery couriers in Pennsylvania to provide some support usually reserved for full-time employees, while keeping workers classified as independent contractors.

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Drivers who earn at least $1,000, excluding tips, on DoorDash in the second quarter will be eligible to receive deposits equal to 4% of their earnings, according to the company, which is running a pilot program from April through September with the backing of Pennsylvania Governor Josh Shapiro. The DoorDash contributions will be made on a monthly basis, starting in July, into a new savings account that individuals can set up with the benefits platform Stride, and can be earmarked toward categories including retirement savings, paying off health insurance premiums, an emergency fund or paid time off.

“We know that outdated rules have meant there are trade-offs for those who dash more consistently and may be missing out on important benefits,” said DoorDash co-founder and Chief Executive Officer Tony Xu in a statement on Wednesday. “I hope this program will provide an example of how we can better meet the unique needs of those who do this kind of work.”

Companies that employ gig workers, including Uber Technologies Inc., Lyft Inc. and Instacart, have come under growing pressure from regulators and labor advocates to provide better pay and labor benefits to their drivers and couriers, who aren’t salaried employees with traditional legal protections.

In legal settlements and resolutions in the US, regulators and companies have embraced an “independent contractor-plus” model, which provides some employee benefits on the job while keeping gig workers off the payroll. The setup allows corporations to control costs and uphold the employment flexibility they say most drivers want. DoorDash said its average courier spends less than four hours a week on delivery and a “vast majority” of drivers have other sources of income or responsibilities that already provide them with access to benefits.

In New York, Uber and Lyft agreed last year to put in place a minimum “earnings floor” based on driving time, offered paid sick leave and pledged to improve hiring and earnings notices. Uber said the agreements will prevent further litigation over whether drivers should be classified as traditional employees as long as the company adheres to the terms of the deal.

In 2020, gig economy companies bankrolled California’s Proposition 22 ballot initiative, which keeps drivers as independent contractors but requires the platforms to establish a pay floor, pay a monthly health care stipend and offer additional occupational accident insurance.

Stride CEO Noah Lang said the company is in talks with more states and cities to set up similar arrangements, and expects more employers to make contributions for their independent workers using the firm’s new savings account product. Since its 2014 launch, Stride has partnered with more than 100 organizations including Uber and Amazon.com Inc. to provide workers without benefits with access to various health insurance plans — as an insurance broker — mileage and expense tracking and tax support, among other services.

“We’re in an era where over 64 million Americans work independently,” Lang said. “It’s time for our benefits system to catch up to the way Americans work today.”

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