California Passed a Bill That Will Make Delivering Food for a Startup Drastically Better

The legislation will make it illegal for delivery apps to pocket drivers’ tips and force companies to reimburse drivers for gas and other expenses.
September 11, 2019, 4:41pm
Getty/Eduardo Parra

California just passed a landmark labor bill that would drastically improve working conditions for gig economy workers. Although the spotlight has focused on what the law would mean for the ride-share giants Lyft and Uber—workers on delivery apps like GrubHub, DoorDash, Instacart, and Postmates would also receive radical changes to the rights and protections they receive at work.

The legislation, known as AB5, passed the California’s senate with a 29-11 vote on Tuesday evening, and is expected to receive final approval from governor Gavin Newsom in the coming days. Unless delivery apps receive an exemption, it would force them to reclassify their workers as employees instead of independent contractors—giving them basic labor protections like a minimum wage, health care, paid time off, and overtime pay. DoorDash has pledged to spend $30 million on a ballot initiative in 2020 in an attempt to exempt their workers from the bill. The law would go into effect on January 1, 2020.


For delivery couriers working on apps, the specific gains would be important. If forced to reclassify their delivery workers as employees, apps will have to reimburse drivers at 58 cents for every mile travelled, and cover other costs such as parking and car maintenance. Currently they are not specifically reimbursed for car depreciation.

The apps will no longer be able to pocket any share of drivers’ tips or to subtract tips from a driver’s base wage—an issue that has outraged both customers and workers alike. DoorDash became the largest food delivery app in the country by adopting a wage model that used tips to subsidize drivers’ wages. (The company promised to change their model to give workers 100 percent of tips after coming under intense pressure in July.) In California, it’s illegal for an employer to pocket or subtract tips from an employee’s pay. But as independent contractors, delivery couriers have been exempt from this law, as well as any minimum wage floor.

“We're disappointed that California lawmakers missed a major opportunity to create a groundbreaking approach that pairs the flexibility Dashers tell us they value most with the economic security they deserve,” a spokesperson from DoorDash told Motherboard in response to news of the bill’s passage. “DoorDash is committed to passing a new law—in the legislature or at the ballot—that would create benefits and protections for Dashers, including a guaranteed minimum wage with the opportunity to earn more, access to benefits, and protections against discrimination and sexual harassment.”


Delivery couriers would also receive pay for time spent waiting for orders on the app. “Currently, as contractors, they don’t have to be paid for that wait time. The [current] classification as independent contractors shifts all of the risk onto the worker,” said Aaron Blumenthal, a lawyer in Oakland who represents DoorDash workers on wage theft and employee misclassification cases.

Blumenthal says with the passage of AB5, “all workers will presumptively be employees,” and the onus will be on the companies to prove that a worker is a contractor. “It will be difficult to prove for DoorDash.” If a company knowingly misclassifies employees, the penalty could be up to $25,000--an enormous liability, he says. His class action firm has been contacted by over 1,000 DoorDash workers around the country—with the most common complaint being the company’s lack of transparency around tipping.

Over the past week, DoorDash, Instacart, and Postmates couriers have banded together across the country to demand higher wages and greater transparency on how their pay is determined, after widespread concern that companies pocket their tips and lower their wages as they expand into new markets. On September 5, workers protested outside the headquarters of DoorDash, Instacart, and Postmates in San Francisco—delivering bags of peanuts to executives as a symbol of their low pay.

“Our pay has dropped significantly [since last year]. Before I could make $10 to $12 hour after expenses. Now I’m making $5 to $10 an hour after expenses,” said Jon Wong, a DoorDash worker in Oakland, who participated in the recent actions in San Francisco after learning about them on the DoorDash subreddit. “They got rid of incentives. There’s less bonus pay, and more wait time. The cumulative effect is really hard,” said Wong. DoorDash and other delivery apps calculate pay based on a complicated formula that varies from city to city.

The bill will land on the desk of California Governor Gavin Newsom on September 13 for final approval. Newsom said in an op-ed in The Sacramento Bee that he supports the bill, but has hinted that he could strike a separate deal with companies like Lyft, Uber, and DoorDash that exempts gig workers.