The Philadelphia-based company has announced raising billions of dollars from investors to grow its on-demand delivery business this year alone amid a pandemic-driven boom for online shopping. But it’s also raising a familiar set of labor concerns in the process.
Recently, some Gopuff delivery workers have taken issue with how they’re treated as independent contractors for the company, a classification that helps on-demand companies to cut costs by not obligating them to provide benefits like minimum wage, overtime, and unemployment insurance. These delivery companies typically defend this arrangement as allowing their workers more freedom to be their own boss, but some Gopuff workers have said they’ve experienced what they feel is a lack of independence.
In their day-to-day work, drivers say it feels as though they report to managers at Gopuff’s fulfillment centers — who are classified as employees by the company — rather than just dealing with the whims of an app, as is the case with other gig economy services. These managers control how many shifts to post to meet demand. Some workers said they communicate with managers using Slack and notify them when, for example, stopping for gas.
In response, Gopuff said fulfillment center managers do not have managerial authority over drivers. The company said workers have the choice for whether to secure shifts, which are eligible for minimum pay guarantees that can provide baseline earnings during slow periods, or to pick up delivery orders whenever they want, but without that pay guarantee. With the latter option, it’s unclear whether there would be enough work to make it worth their while given the company uses shift scheduling to meet demand.
“We recognize that as we grow, we must continue to improve our communications channels with delivery partners, and are actively working to enhance delivery partner communications, websites, customer support, and more,” said a Gopuff spokesperson in a statement provided to CNN Business.
The company also said it offers full-time and part-time employment opportunities, which come with benefits, inside its warehouses. Gopuff said it has more than 8,000 employees — including its corporate and warehouse employees. However, Gopuff declined to tell CNN Business how many independent contractors work as delivery drivers with the company.
Trying to make ends meet
But as with other gig economy firms, one of the biggest costs that Gopuff can control when offering expedited deliveries at affordable prices is how much it pays its workers, according to Gad Allon, a professor at University of Pennsylvania’s Wharton School of Business. “Ultimately, most of their costs are labor costs — labor for picking, labor for delivery,” said Allon.
With the scheduled shifts, workers are eligible for a minimum hourly earnings guarantee, according to the company. That means Gopuff will subsidize their earnings to meet that threshold if they don’t hit it through commissions earned on each order, which range from $2.25 to $5.00, according to the company. But just as other gig companies have tweaked rates for workers over the years, Gopuff can choose to raise or slash its hourly earnings guarantee. According to Working Washington, workers at nearly 50 locations have recently reported having their hourly guarantees slashed. By its analysis, the average hourly subsidy cut was $3.96 per hour.
Gopuff said temporary subsidies were offered due to what it called operational changes. In a statement, the Gopuff spokesperson said that “given the fast moving nature of our industry, we will make adjustments to partner compensation to balance a continuously changing supply and demand dynamic in each market we serve,” calling it “industry standard.” (In addition to subsidies, Gopuff, like other gig companies, also offers workers promotions and incentives to boost earnings.)
“We will continue working to communicate any changes clearly, transparently and proactively to delivery partners,” the spokesperson said.
Bradleigh Aeh, a Gopuff delivery worker in Athens, Ohio who has been vocal about the work conditions, said she received a notification last week that a temporary increased subsidy that guaranteed she would make at least $12 per hour would be reduced to $9 this week. Despite Gopuff’s claim that minimum guarantees are at or above local minimum wages, prior to the temporary bump, the pay guarantee at Aeh’s location appeared to be below the local minimum wage of $8.80, according to Aeh and a screenshot reviewed by CNN Business. According to the Working Washington letter, at “some warehouses, the minimum guarantee is lower than local minimum wage,” an amount that is further lowered when factoring in how much workers spend on gas.
“I’ll try to make ends meet, which was still difficult with the $12 and will be even harder now,” Aeh said, noting it can be challenging to quickly secure free shifts before they’re swept up by others as the company adds new workers. “I could find another job in food service, or something … but I’d just be scraping by on minimum wage or close to it the same as I am now.”
Sage Wilson, an organizer with Working Washington, said Gopuff’s model feels familiar. “So much of it seems to be about shifting the cost of driving to workers,” Wilson said. “That’s one of the very expensive parts of doing delivery, and it’s a cost which in the short term can remain hidden from people doing the work until they get the big repair or run their car into the ground.”
According to Gopuff, there are unique benefits to its business that set it apart from other gig economy jobs, including that drivers deliver within a short radius of a micro-fulfillment center, resulting in less wear and tear on vehicles. It also said delivery partners can use the restroom at these fulfillment centers.
