Ahead of Amazon-backed delivery company Deliveroo’s initial public offering on the London Stock Exchange—expected to raise over $1.3 billion and push a $12 billion valuation in early April—a scathing report has revealed the company’s couriers often make well below the national minimum wage.
The Bureau of Investigative Journalism (TBIJ) analyzed thousands of invoices from over 300 Deliveroo riders covering 12,000 “sessions” where couriers logged on for a cumulative 34,000 hours across one year. 56 percent of couriers earned less than an average of nearly $14 an hour for time logged in, and 41 percent received below $12 an hour, which is the legal minimum wage for workers over 25 years of age. 17 percent of riders earned less than nearly $9 per hour—Britain’s lowest minimum wage. In the worst instance, the team found one courier who was paid just under $3 per hour.
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Deliveroo, like every other app-based gig company, relies on a series of loopholes and exemptions to classify its workers as “self-employed,” (independent contractors) a move that frees companies from many legal obligations to workers.
Crucially, gig workers are only paid for the piece of work their company assigns them—per delivery, on Deliveroo—meaning they can spend hours logged in but only be paid for a fraction of that time. Thanks to the self-employed classification, gig workers are also on the hook for expenses incurred whether by wasting time waiting for trips, burning fuel in between orders, or maintenance of their vehicle for miles accrued.
Talking with TBIJ, Deliveroo spun this as proof of driver flexibility and explained that if the time between delivery orders was excluded then its pay rate was well above minimum wage.
“Riders do not work in hourly patterns, and time logged on does not mean they are working: riders are free to reject work without penalty at any time and can work for other companies while logged in to our app. Almost half of orders are rejected at least once,” the company told TBIJ in a statement.
For companies with business models that rely on misclassification, the usual argument is that workers are “flexible” or otherwise free to choose where, when, and how to work. The reality, however, is that gig work is often highly structured and scheduled. In fact, workers are effectively managed by an opaque system of algorithmic overseers common across the gig economy that surveil and collect as much data as possible. Deliveroo is no different.
One Deliveroo algorithm that was ruled to be discriminatory by an Italian court constructed a “reliability index” for workers and rewarded people who could make deliveries regardless of their circumstances and gave them priority access to shifts at peak times.
Currently, another algorithm, named “Frank” after a character in It’s Always Sunny in Philadelphia, hoards as much data as possible to ostensibly improve predictive analysis and cut delivery times by allocating work. Yet another algorithmic system determines pay to help “maximise earning potential,” Deliveroo told TBIJ.
Concerns about Deliveroo’s working conditions have already pushed some investors to say they won’t participate in the IPO. Legal & General Investment Management, Aberdeen Standard Investments and Aviva Investors–the first, third, and seventh largest UK asset managers, respectively–all said this week they’d steer clear of the IPO. Together, the fund managers represent some $2.5 trillion in capital.
“We’re looking to invest in businesses that aren’t just profitable, but are sustainable,” Aberdeen’s head of UK equities Andrew Millington told Bloomberg. “Employee rights and engagement are an important part of that.”
Deliveroo’s pay rates have changed and sparked strikes multiple times in the past few years.
In France, the New York Times reported that Deliveroo was facing public and regulatory scrutiny in 2019 because desperate migrants were being exploited both by couriers renting out accounts and by the company constantly changing its pay structure. “Every year we earn less, we deliver less,” one driver told the New York Times. “They change conditions by cutting wages or changing payment rules.”
In its S-1 filing, Deliveroo acknowledged all the risks to its business that its own behavior poses. It makes the familiar gig economy disclosure to investors that “our business would be adversely affected if our rider model or approach to rider status and our operating practices were successfully challenged or if changes in law require us to reclassify our riders as employees,” for example.
That may very well happen in Britain, but Deliveroo could scrape through by taking a page from Uber’s playbook. In February, the Supreme Court reclassified Uber drivers as “workers,” which allows them to earn a minimum wage and receive vacation pay. Uber responded by saying it would voluntarily offer all 70,00 drivers in the country minimum wage, holiday pay, and pensions, but only for the time during which work is assigned versus total time logged in.
Plaintiffs in the lawsuit that led to that ruling have said that Uber’s move is actually in violation of the Supreme Court’s designation, but that is unlikely to stop the company. Whatever happens to Deliveroo, if anything, it’s more than likely it too will find a way to scrape through until the next challenge while reaping mounds of cash.
Deliveroo did not respond to Motherboard’s request for comment.
