California DoorDash workers protested outside of the home of DoorDash CEO Tony Xu on Thursday, prompted by a recent California Superior Court Judge ruling calling 2020’s Proposition 22 unconstitutional. Prop 22, which was passed last November in California, would allow app-based companies like DoorDash, Uber and Lyft to continue classifying workers as independent contractors rather than employees.
A group of about 50 DoorDash workers who are affiliated with advocacy groups We Drive Progress and Gig Workers Rising traveled caravan style to the front of Xu’s house in the Pacific Heights neighborhood of San Francisco. They demanded that DoorDash provide transparency for tips and 120% of minimum wage or around $17 per hour, stop unfair deactivations and provide free personal protective equipment, as well as adequate pay for car and equipment sanitizing.
“Dasher concerns and feedback are always important to us, and we will continue to hear their voices and engage our community directly,” a DoorDash spokesperson told TechCrunch. “However, we know that today’s participants do not speak for the 91% of California Dashers who want to remain independent contractors or the millions of California voters who overwhelmingly supported Proposition 22. The reality is, the passage of Prop 22 has addressed in law many of the concerns raised today through its historic benefits and protections: workers earn 120% of their local minimum wage per active hour in addition to 100% of their tips, receive free PPE and enjoy access to healthcare funds.”
DoorDash drivers say getting paid for the time they’re “active,” meaning actively driving to either pick up food and drop it off, rather than when they’re online and waiting for gigs to come through, leads to inadequate pay. They also say much of their living wage comes from tips, which should be an added bonus, but ends up helping make ends meet based on DoorDash’s pay structure. Prop 22 is also meant to guarantee a reimbursement of 30 cents per engaged mile, which drivers say “would be great if it were true.” DoorDash did not respond to follow ups regarding its pay structure or claims from dashers that they have not been given free PPE.
Rondu Gantt, a gig worker who’s been working for DoorDash for two and a half years and also drives for Uber and Lyft to get by, says his base pay from DoorDash is often as low as $3 per hour, and that around 40% to 60% of his money comes from tips. Although this model sounds similar to the restaurant industry in the United States, which can be quite lucrative for servers and bartenders, for a delivery driver, it’s an unsustainable way to make a living because tipping culture isn’t nearly as strong.
“DoorDash pays so low because they want to make it affordable for the customer, but I would say for the driver it becomes unaffordable,” Gantt told TechCrunch, citing the costs of owning, maintaining, parking and fueling a vehicle as potentially crippling. “Last week, I drove for 30 hours and I made $405. That’s $13.50 per hour, which is below minimum wage.”
Gantt said drivers also have had to deal with pressure to drive in unsafe conditions, and we can look to the images of delivery drivers in New York City during Hurricane Ida as an example of some conditions drivers feel compelled to accept. Over the past two years, DoorDash drivers have also been deemed essential workers, interacting with and providing services for many people during a pandemic at the risk of their health.
Gig Workers Rising says DoorDash workers “have received little to no safety support” with some workers reporting “being reimbursed as little as 80 cents per day for cleaning/sanitizing equipment and PPE that they use to keep themselves and customers safe.”
“Right now gig work isn’t flexible,” a spokesperson for Gig Workers Rising told TechCrunch. “Workers are at the mercy of when there’s demand. If they were employees the work would change as they’d work in the knowledge that they’ve healthcare and can take a sick day off.”
Because Prop 22 was ruled unconstitutional, the spokesperson said by rights it shouldn’t be in operation.
“The gig corporations violate that law everyday by choosing not to comply with it,” he said.
For Gantt’s part, he doesn’t necessarily want to be an employee, he just wants to make sure that he’s being paid what he deserves.
“Which is not minimum wage,” he said. “Minimum wage would be unacceptable as well. The cost of doing this, the danger, makes minimum wage unacceptable pay. And realistically, they’re only sometimes paying you minimum wage before taxes. After taxes you’re definitely making less.”
TechCrunch was given access to DoorDash workers’ dashboards that break down their pay. For the week of July 12 to July 19, one dasher was paid a total of $574.21 for 53 deliveries, $274 of which came from customer tip. His “active time” was 14 hours and 21 minutes, and his “dash time,” or when he was logged onto the app waiting for gigs to come through and doing deliveries, was about 30 hours.
The dasher’s “guaranteed earnings” from DoorDash for the week was $300.21. (DoorDash did not respond to clarification on how guaranteed weekly earnings are calculated or what they’re based on, but a post on the company’s site says that guaranteed earnings are incentives for dashers in specific areas.) His base pay ended up at about $257.62, but DoorDash added an additional $42.59 to adjust to guaranteed earnings. If we divide the amount DoorDash paid by the number of hours of “active time,” the worker was paid about $21 per hour. If we divide it by the “dash time,” it looks more like $10 per hour.
Again, this is before tax. Independent contractors are usually advised to put aside around 30% of their paycheck because they have to pay self-employment tax, which is 15.3% of taxable income, federal income tax, which varies depending on tax bracket, and potentially state income tax. After taxes, this dasher’s total pay for 30 hours of work, including his $274 worth of tip, would be around $402, which comes out to $13.40 per hour.
Tips were of concern at the protest on Thursday as drivers called for transparency. Gantt says dashers can see a cumulative amount of tip earnings per week, as well as how much tip they’re receiving from each order, but they don’t trust the amount they’re receiving is actually the amount customers are tipping them.
Gantt and other drivers aren’t just being paranoid. Last November, DoorDash agreed to pay $2.5 million to settle a lawsuit alleging the company stole drivers’ tips and allowed customers to think their tip money was actually going to the drivers. The suit, filed by Washington, D.C. attorney general Karl Racine, alleged DoorDash reduced drivers’ pay for each job by the amount of any tip.
One of the rallying cries of the protest was for Xu to “share the wealth.” In 2020, the CEO was reportedly the highest paid CEO in the Bay Area, making a total salary of $413.67 million. During the second quarter, DoorDash saw a $113 million profit adjusted for EBITDA, but was overall unprofitable with a net loss of $102 million.
“We all work for money and how that money gets distributed when they go through their earnings is telling you who matters and who doesn’t matter,” said Gantt. “It’s a clear sign of who’s important, who has value. If they don’t pay you, they don’t value you.”
Massachusetts Attorney General Maura Healey gave a coalition of app-based service providers like Uber and Lyft the go-ahead to start collecting signatures needed to put a proposed ballot measure before voters that would define drivers as independent contractors rather than employees.
Backers of the initiative, which is essentially a MA version of Proposition 22, would need to gather tens of thousands of signatures for the measure to make it to the November 2022 ballot. Despite the fact that last year Healey filed a lawsuit that challenged Uber and Lyft’s classifications of drivers as contractors who are therefore not entitled to benefits like sick leave, overtime or minimum wage, on Wednesday, the AG certified the current measure met constitutional requirements.
The news comes nearly two weeks after a superior court judged ruled California’s Prop 22, which was passed in 2020, unconstitutional. The union-backed Coalition to Protect Workers’ Rights urged Healey to reject the measure under the same grounds, and told Reuters that it is considering suing to challenge the measure.
The Massachusetts Coalition for Independent Work, the coalition of members including Uber, Lyft, DoorDash and Instacart, filed the petition for this ballot initiative last month, a move that Uber CEO Dara Khosrowshahi said he thinks is “the right move.” The proposed initiative would also allow drivers to earn a minimum of $18 per hour in 2023 before tips and provide those who work for at least 15 hours per week with healthcare stipends. Drivers would also be guaranteed at least 26 cents per mile to cover vehicle upkeep and gas.
The coalition has until December 1 to collect and file 80,239 signatures from voters. If they miss that deadline, they can gather an additional 13,374 signatures by July 6, 2022 to get the initiative on the ballot.
In a late Friday night blow to Uber, Lyft and other gig worker-centered companies, a superior court judge ruled that California’s Proposition 22, which was passed in 2020 and designed to overrule the state’s controversial AB-5 law on the employment status of gig workers, violates the state’s constitution.
Frank Roesch, a superior court judge in Alameda County, which encompasses Oakland, Berkeley and much of the East Bay, ruled that the law would limit “the power of a future legislature” to define the employment status of gig workers. The lawsuit was filed by the Service Employees International Union (SEIU) in January, after a similar lawsuit was rebuffed by the California Supreme Court and referred to a lower court.
The court’s decision will almost certainly be appealed and further legal arguments are to be expected.
The superior court’s decision is just the latest in a long line of victories and defeats in the battle between companies that heavily rely on gig workers like Uber and DoorDash, and unions and advocates representing workers. Much of the debate centers on the legal distinction between a freelancer and an employee, and to what extent companies are responsible for the care and benefits of their workers.
Such a distinction is big business: Uber, Lyft and other companies spent more than $200 million collectively to push Prop 22 to victory last year. California voters passed the proposition roughy 59% to 41% in what was widely perceived as a major victory for gig worker platforms.
Such fights are not limited to merely Silicon Valley’s home state, however. Earlier this year in the United Kingdom, Uber lost a legal battle over its employment classification decisions and ultimately reclassified tens of thousands of its drivers as workers, a decision which offered them a range of benefits not previously guaranteed.
Catch is working to make sure that every gig worker has the health and retirement benefits they need.
The company, which is in the midst of moving its headquarters to New York, sells health insurance, retirement savings plans and tax withholding directly to freelancers, contractors or anyone uncovered.
It is now armed with a fresh round of $12 million in Series A funding, led by Crosslink, with participation from earlier investors Khosla Ventures, NYCA Partners, Kindred Ventures and Urban Innovation Fund, to support more distribution partnerships and its relocation from Boston.
Co-founders Kristen Anderson and Andrew Ambrosino started Catch in 2019 and raised $6.1 million previously, giving it a total of $18.1 million in funding.
It took the Catch team of 15 nearly two years to get approvals to sell its platform in 38 states on the federal marketplace. Anderson boasts that only eight companies have been able to do this, and three of them — Catch included — are approved to sell benefits to consumers. The other side of the business is payroll, and the company has gathered thousands of sources based on biller.
“More companies are not offering healthcare, while more people are joining the creator and gig economies, which means more people are not following an employer-led model,” Anderson told TechCrunch.
The age of an average Catch customer is 32 years old, and in addition to current offerings, were asking the company to help them set up income sources, like setting aside money for taxes, retirement, as well as medical leave without having to actively save.
When the global pandemic hit, many of Catch’s customers saw their income collapse, 40% overall across industries, as workers like hairstylists and cooks had income go down to zero in some cases.
It was then that Anderson and Ambrosino began looking at partnership distribution and developed a network of platforms, business facilitation tools, gig marketplaces and payroll companies that were interested in offering Catch. The company intends to use some of the funding to increase its headcount to service those partnerships and go after more, Anderson said.
Catch is one startup providing insurance products, and many of the competitors either do a single offering and do it well, like Starship does with health savings accounts, Anderson said. Catch is taking a different approach by offering a platform experience, but going deep on the process, she added. She likens it to Gusto, which provides cloud-based payroll, benefits and human resource management for businesses, in that Catch is an end-to-end experience, but with a focus on an individual person.
Over the past year, the company’s user base tripled, driven by people taking on second jobs and through a partnership with DoorDash. Platform users are also holding onto 5 times their usual balances, a result of setting more goals and needing to save more, Anderson said. Retirement investments and health insurance have grown similarly.
Going forward, Anderson is already thinking about a Series B, but that won’t come for another couple of years, she said. The company is looking into its own HSA product as well as disability insurance and other products to further differentiate itself from other startups, for example, Spot, Super.mx and Even that all raised venture capital this month to provide benefits.
Catch would also like to serve a broader audience than just those on the federal marketplace. The co-founders are working on how to do this — Anderson mentioned there are some “nefarious companies out there” offering medical benefits at rates that can seem too good to be true, but when the customer reads the fine print, finds out that certain medical conditions are not covered.
“We are looking at how to put the right thing in there because it does get confusing,” Anderson added. “Young people have cheaper options, which means they need to make sure they know what they are getting.”
The global pandemic highlighted inefficiencies and inconsistencies in healthcare systems around the world. Even co-founders Mayank Banerjee, Matilde Giglio and Alessandro Ialongo say nowhere is this more evident than in India, especially after the COVID death toll reached 4 million this week.
The Bangalore-based company received a fresh cash infusion of $5 million in seed funding in a round led by Khosla Ventures, with participation from Founders Fund, Lachy Groom and a group of individuals including Palo Alto Networks CEO Nikesh Arora, CRED CEO Kunal Shah, Zerodha founder Nithin Kamath and DST Global partner Tom Stafford.
Even, a healthcare membership company, aims to cover what most insurance companies in the country don’t, including making going to a primary care doctor as easy and accessible as it is in other countries.
Banerjee grew up in India and said the country is similar to the United States in that it has government-run and private hospitals. Where the two differ is that private health insurance is a relatively new concept for India, he told TechCrunch. He estimates that less than 5% of people have it, and even though people are paying for the insurance, it mainly covers accidents and emergencies.
This means that routine primary care consultations, testings and scans outside of that are not covered. And, the policies are so confusing that many people don’t realize they are not covered until it is too late. That has led to people asking doctors to admit them into the hospital so their bills will be covered, Ialongo added.
Banerjee and Giglio were running another startup together when they began to see how complicated health insurance policies were. About 50 million Indians fall below the poverty line each year, and many become unable to pay their healthcare bills, Banerjee said.
They began researching the insurance industry and talking with hospital executives about claims. They found that one of the biggest issues was incentive misalignment — hospitals overcharged and overtreated patients. Instead, Even is taking a similar approach to Kaiser Permanente in that the company will act as a service provider, and therefore, can drive down the cost of care.
Even became operational in February and launched in June. It is gearing up to launch in the fourth quarter of this year with more than 5,000 people on the waitlist so far. Its health membership product will cost around $200 per year for a person aged 18 to 35 and covers everything: unlimited consultations with primary care doctors, diagnostics and scans. The membership will also follow as the person ages, Ialongo said.
The founders intend to use the new funding to build out their operational team, product and integration with hospitals. They are already working with 100 hospitals and secured a partnership with Narayana Hospital to deliver more than 2,000 COVID vaccinations so far, and more in a second round.
“It is going to take a while to scale,” Banerjee said. “For us, in theory, as we get better pricing, we will end up being cheaper than others. We have goals to cover the people the government cannot and find ways to reduce the statistics.”