The coronavirus pandemic has severely hampered the restaurant industry in America, but many eateries have adapted by embracing takeout and delivery services to keep their kitchens going.
That, in turn, has expanded opportunities for food delivery drivers. Restaurants that never offered home delivery before are offering it now through their own drivers or in connection with one of the national delivery service networks such as DoorDash, Grubhub and Uber Eats.
Even before the pandemic hit though, the food delivery business was expanding thanks to the rise of these national delivery services and the gig economy they are built on.
The result of this expansion has been more food delivery job opportunities in both traditional employment and the gig economy style, each offering different compensation and benefits.
How Much Do Food Delivery Drivers Make?
According to Glassdoor.com, an online job board and employment website, the U.S. national average salary for a pizza delivery driver – the most common of the traditional food delivery driver jobs – is $27,113, with hourly rates varying from $5 per hour to $15, depending on location.
Much like a server in a restaurant, a food delivery driver often depends on tips and gratuities to augment their low base pay.
Food delivery drivers working with food delivery app services including DoorDash, Uber Eats, Grubhub and Postmates, among others, earn their pay through a much more nuanced formula that takes into account things like the time of day and day of the week they are delivering and how busy the app is at the time. The busier the app, the more the drivers are usually paid, according to the industry website RideShareGuy. Location is also a big factor, with drivers in urban areas earning more on average.
A 2018 study published by USA Today, based on job listings and reported wages on Glassdoor and on online job board Indeed, found that Grubhub drivers typically make $11-$12 per hour. A driver working a full 40-hour work week for a year would stand to earn around $24,000 a year.
The average expected salary for a driver for Uber Eats was about the same, slightly higher in urban areas, the USA Today report said. Drivers for DoorDash reported salaries on Glassdoor and Indeed of between $10 and $17.75 per hour, coming out to $20,800 to $36,900 for full-time work for a year. Postmates drivers reported earning between $11 per hour and $19.97 on the job boards, which would put their annual pay at $22,880 to $41,500.
How Can a Food Delivery Driver Get Reimbursed for Expenses?
Food delivery drivers who work as employees can get reimbursed for expenses, such as fuel and wear and tear on their car, if they use their own vehicle to make the deliveries – but not always. Additionally, the rate of reimbursement is often less than the cost of the driver’s actual expense.
Most restaurants that offer their delivery drivers reimbursement for expenses do so at the IRS standard mileage reimbursement rate, which for 2020 is 57.5 cents per mile. According to an article by Medium.com, that rate doesn’t actually cover the real cost to the driver. A 2018 survey conducted by Coworker.org found that 77% of respondents identified “damage or wear-and-tear to their vehicles as one of the main problems they have faced on the job.”
“Drivers say that the damage working in food delivery inflicts on their vehicles cuts significantly into their paychecks,” the article said.
Survey participants said companies aren’t doing enough to offset the cost to drivers for using their personal vehicles. One delivery driver reported clocking 80-120 miles per shift. “You run your vehicle into the ground. Wear and tear on tires, oil changes, and any other damage to your work vehicle are completely on you as an individual with no assistance from the company,” the article said.
Unlike an employee, a food delivery driver working as an independent contractor in the gig economy for services including DoorDash and Uber Eats does not get reimbursed by those companies for their expenses. That’s because they are considered to be self-employed and responsible for their own expenses. The only potential avenue for compensation is through claiming the costs as business expenses when filing their tax returns.
Do Labor Laws Give Delivery Drivers Any Protection?
State and federal labor laws afford protections to delivery drivers who work for companies as their employees – requiring they be paid minimum wages and overtime for hours in excess of the standard workweek hours, that they be offered subsidized health insurance if the company is large enough, and other basic benefits.
Independent contractors have little protection under existing laws. Businesses operating in the gig economy say they are able to operate, in part, because of the lack of regulation over their relationships with the independent contractors working with them.
Legislators in some states have grown concerned that those businesses are taking advantage of vulnerable workers by misclassifying them as contractors when they should be treated as employees. That concern has led, in at least one state, to new laws demanding that certain requirements are met before classifying a worker as an independent contractor.
California lawmakers passed the controversial Assembly Bill 5 (AB5) last year with the intention of protecting people working in the gig economy by forcing companies to reclassify those workers as full-fledged employees. Advocates for the change said it was important to limit a company’s ability to shortchange workers by reaping the benefits of their labor without having to compensate them the same way they do traditional employees.
Opponents have argued the added cost of fully employing the freelance workers would create a burden heavy enough to hurt many businesses and, in turn, the economy.
Although the law went into effect in January, it has been tied up in civil litigation in California’s courts.
Under the terms of California AB5, a worker must be considered an employee, not an independent contractor, unless the business hiring the worker can demonstrate three things:
- That the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact.
- That the worker performs work that is outside the usual course of the hiring entity’s business.
- That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
What Is California’s Prop 22?
Residents of California will have the power to make some changes to AB5 by voting on Proposition 22 this November, a measure that would exempt food delivery services and rideshare companies from regulation under the controversial law.
If enough voters approve Prop 22, DoorDash, Grubhub, and similar services will be free to continue as before, working with the drivers and independent contractors and not having to fully hire them and provide them mandatory benefits.
The companies themselves are lobbying heavily for Prop 22 and say that, if it fails along with the court battles they’ve waged against AB5, they would be forced to shut down operations in California.
Can Food Delivery Drivers Sue for Being Misclassified as Gig Workers?
Where there are laws, there are penalties for violating those laws.
Business that violate AB5 in California are subject to penalty if the violations can be proven. The law calls for fines of $5,000 to $25,000 per violation and companies found guilty “can be forced to cover payroll taxes, overtime pay and other costs retroactively if workers had been properly classified as employees,” according to a report by the Orange County Register.
Workers who believe they have been misclassified as independent contractors in violation of California AB5 can also file class action lawsuits or individual legal action against their employers. In July, for example, the J.B. Hunt trucking company agreed to settle a class action lawsuit filed against it by 312 independent contract drivers for $6.5 million. The drivers, who filed suit in U.S. Federal District Court for the Central District of California in 2019, will receive about $20,000 each to drop the court case, the trucking industry website Freightwaves reported.