App Workers Fear Pay Reductions from Employers for Delivery Caps

When lawmakers in Ontario introduced their “Supporting Local Restaurants Act” which gives local authorities the power to limit third-party delivery fees from companies like Uber Eats and DoorDash, they thought they were protecting workers who may lose wages. They were concerned that these companies would start gutting their workforce if restaurants had to continue paying full-price delivery fees.

However, since its introduction, lawmakers have received more pushback from app employees than from the companies themselves. Their concern? The law is silent about whether these companies can back charge their employees to make up for lost revenue.

“The couriers we work with are already shortchanged by their app-based employers,” Jan Simpson, the Canadian Union of Postal Workers’ (CUPW) National President said in a statement. “We’re worried that the employers will pass the cost onto the workers, who have little to no transparency about their pay rates as it is.”

CUPW is one of Canada’s largest unions, representing a diverse workforce from postal workers to cleaners, couriers, drivers, vehicle mechanics, warehouse workers, printers, emergency medical dispatchers, and other workers in the private sector.

Under Canada’s bill, delivery companies are prohibited from passing the financial impact on their employees. However, Simpson notes there is no enforcement mechanism in the bill. So, while it seems unlikely now that delivery drivers will assume the additional costs, Simpson isn’t ready to roll over and accept the explanation.

“The apps’ business model has always exploited both small businesses and couriers,” says Simpson. “This Bill is not enough to make them change their ways. How are workers to know, let alone prove to the government, that they’re paying for the fee cap to protect silicon-valley profits? The burden falls on the wrong people. We demand protection for these workers.”

For their part, neither DoorDash nor Uber Eats has been trustworthy actors toward their employees. DoorDash is reportedly settling a lawsuit alleging the company stole tips from its employees for $2.5 million, a slap on the wrist compared to its $1 billion revenue stream.

Similarly, Uber Eats is facing a federal employment lawsuit for allegedly dismissing a driver for being 10 minutes late with an order.

In the US, several states have passed similar legislation. In Colorado, counties can cap delivery fees only during a public health emergency. California cities like Berkeley and Santa Clara have imposed severe restrictions. Berkeley’s city council recently updated the city municipal code so that it “reduces the allowed delivery fee from 15% to 10%; other fees that the app companies may charge restaurants, such as commissions, will continue to be capped at 5%,” according to The Mercury News.

Colorado’s law, passed during a special session of the state legislature, specifically addresses the issue of passing lost revenue onto drivers. It prohibits these companies from “reducing the compensation rate or tips paid to a delivery driver or retail food establishment to offset revenue reductions resulting from a fee limit.” However, the bill does not carry an enforcement mechanism.

DoorDash has already signaled how it intends to make up for lost income. In Denver, the company is adding a $2 “Denver fee” to all online delivery orders.

Prior to the fee cap, DoorDash charged Denver businesses an average of 35% of the bill for delivery, according to CBS4. Now, with the cap at 15% and likely to decrease, the company said it had no other option.

“Denver has temporarily capped the fees that we may charge local restaurants. To continue to offer you convenient delivery while ensuring that Dashers are active and earning, you will now see a charge added to Denver orders,” the company told CBS4 in a statement.

For delivery drivers like Brice Sopher in Toronto, the ambiguity surrounding whether drivers can be charged to make up for lost revenue could cripple driver income during the pandemic, thereby increasing the threat of eviction for app and gig workers who rely solely on this income.

“Workers often have no idea how their pay is calculated and rates can vary wildly from hour to hour,” Sopher said in a statement. “Expecting gig workers to conclusively prove they’ve had their pay cut through some nebulous complaints process essentially allows companies like Doordash, SkipTheDishes, and Uber Eats to slash pay for couriers with very little risk of any repercussions.”

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