Investor Alert

Jan. 1, 2022, 12:23 p.m. EST

From treatment of gig workers to tip transparency, the app-based economy could see key changes in 2022

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By Levi Sumagaysay

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For more: With Uber and Lyft prices rising, passengers return to the original ride-hailing service — taxicabs

Ryan White, a labor lawyer in Canada, said Toronto’s government is “incredibly friendly” to business. “They’ll pitch this as, ‘We will give gig workers rights.'”

Jennifer Scott, president of Gig Workers United in Ontario, agreed: “Uber lobbies very hard, they use really well-rooted marketing language to veil what they’re doing to make it seem like what they’re doing is progressive.”

Looking at promises and transparency

Local, state and federal regulators and legislators are also looking to the promises gig companies make to prospective workers and the amount of information (and tips) they share with those who do the work. The U.S. Federal Trade Commission recently warned gig companies and others that they could be fined up to $43,792 per violation if they mislead workers about how much they can earn on their platforms.

Lois Greisman, associate director for marketing practices at the FTC, told MarketWatch in October that the gig economy was “an area of serious concern” when it comes to promises about wages.

See: Uber, DoorDash, Lyft and Amazon could face billions in fines if they mislead over wages, FTC official warns

DoorDash delivery workers say the company — which has said its “Dashers” make an average of $25 an hour working less than four hours a week — does not actually make clear how much they can earn.

“They don’t show the whole amount up front,” said Lester Oliveros, who does DoorDash deliveries in Florida’s Tampa Bay area. He said since the summer, DoorDash’s base pay has gone down to as little as $2.50 per order. The amount he sees on the app before he accepts a delivery doesn’t disclose exactly how much a customer has tipped, saying instead that the “total may be higher.”

A DoorDash spokesman said the company does this to try to give all workers an equal chance at “high-value deliveries,” while some delivery workers say it is a way to get them to take lower-paying orders.

In-depth: The pandemic has more than doubled food-delivery apps’ business. Now what?

Kristina Ashford, a DoorDash worker in Vancouver, Wash., started doing deliveries last year when the coronavirus pandemic began and her other work as a housecleaner dried up. She also said base pay is as low as $2.50 per order. And if customers don’t tip when they place an order but instead tip afterward, she has found that she sometimes doesn’t get the full tip, she added.

“I have never made $25 an hour,” she said. “There’s just no way, even when it was really busy… [considering the] wear and tear on my car, the gas, the stress, I probably made $15 an hour at the most.”

That’s about how much Oliveros has been earning on average lately: $15 an hour. He said at one point he was making about $1,000 a week working 40 hours — which would be $25 an hour — but that more recently he was making about $600 a week working the same amount of hours.

Don’t miss: How gig work widens the racial wealth gap — and what can be done about it

DoorDash has repeatedly said it is transparent about how much workers can earn on each delivery, and a spokesman again told MarketWatch that its delivery workers receive 100% of customer tips.

On the topic of transparency and tips, starting next year, food-delivery platforms such as DoorDash, Uber Eats and Grubhub will have to comply with a new California law that requires them to: give workers 100% of their tips; provide more information about delivery fees to their restaurant partners and customers; and not charge customers more than restaurants do.

The issues the California law addresses are similar to those in a lawsuit filed by the city of Chicago against DoorDash and Grubhub last summer. Among other things, the city’s lawsuit accused DoorDash of subsidizing its base pay to drivers with customer tips, which the company denies.

Investor concerns

The many regulatory issues facing gig companies in the coming year are concerning to investment analysts — up to a point. The business model has been threatened before and has managed to survive, but there are legitimate questions about companies’ ability to be profitable even under current constrictions, much less if new regulations are established and enforced.

Read: DoorDash will require all employees to deliver goods or perform other gigs, and some of them aren’t happy

Tom White, an analyst for D.A. Davidson, agrees that the gig economy could be in for some important developments in 2022.

“Whether or not it’s a watershed year, I don’t know,” he said, adding that new regulatory issues pop up all the time. For example, he said, the pandemic sparked the emergency delivery-fee caps that some cities are trying to make permanent.

Longer term, increasing regulatory pressure could prompt gig companies to raise prices, possibly reducing their size or opportunities, White said. Or they could be forced to exit certain markets.

But “they do have a little bit of pricing power, and consumers keep using the platforms,” he said.

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