Some Postmates Delivery Drivers Won’t Be Allowed To Work For Uber Following Its Acquisition
As Uber acquires competitors and consolidates the food delivery market, drivers are losing income and options.
Some gig workers who rely on Postmates for part or all of their income are missing out on paychecks since Uber acquired the food delivery company in December. At least half a dozen gig workers who spoke to BuzzFeed News are experiencing unexplained delays in the transition to Uber’s platform, and some with traffic violations or criminal histories are being denied approval to drive for the app altogether.
By purchasing Postmates in the $2.65 billion deal, Uber removed a major competitor in the food delivery market and put itself on a clearer path to profitability. It’s part of an ongoing consolidation trend in delivery: Eight years ago, Seamless merged with Grubhub, which last year was bought by Just Eat, a leading European food delivery company, for $7.3 billion. DoorDash acquired Caviar in 2019. And Uber only decided to buy Postmates after it had reportedly failed to buy Grubhub.
But for gig workers, the union of two industry competitors means being increasingly dependent on the terms set by a single company.
Ray Adams, 25, has been earning money on Postmates for the last three months since leaving his job at a restaurant in Raleigh, North Carolina. When he tried to make the switch from Postmates to Uber Eats, he was rejected because of a reckless driving charge. Adams said he successfully pleaded the charge down to improper driving two years ago with the help of a lawyer he paid $1,000, so he should be eligible to drive for Uber. The app disqualifies drivers with either one recent major driving violation or multiple recent minor driving violations. Adams reached out to Checkr, the background check company Uber uses, to correct the error but hasn’t heard back yet.
By the time Postmates shuts down for good next month, he said, “If I haven’t managed to get accepted by another delivery service, it’s going to be pretty disastrous to my income. It was a bit of a slap in the face.”
One of the benefits of gig work is supposed to be that drivers only work when they want to and when the amount they’ll earn seems worth it. This forces gig economy apps to compete with each other for labor and encourages them to set rates high enough to attract workers. Uber is increasing its bargaining power in the labor market by consolidating the delivery space and completely erasing one source of income for gig workers.
“As in any labor market, the fewer competitors there are for your labor, the fewer places you have that you get work, [which] increases the power the boss has over workers,” Marshall Steinbaum, an economist at the University of Utah, told BuzzFeed News. “They aren’t really able to enjoy what should be the benefits of being an independent contractor … to work for whoever is offering you the best deal on any one platform.”
And as independent contractors, those workers also won’t receive benefits like unemployment insurance in most states while they figure out what’s next.
Uber acknowledged that its requirements for driving records will mean a certain percentage of Postmates couriers will lose that source of income but declined to give an exact figure.
“As we work to integrate Uber Eats and Postmates, a priority has been in maximizing earning opportunities for as many delivery people as possible—without compromising Uber’s commitment to safety,” a spokesperson told BuzzFeed News in an email statement. “We are thrilled to welcome everyone who meets our onboarding criteria to the Uber app, and are working to make the process as seamless as possible for all couriers who do.”
In January, Uber laid off about 185 members of Postmates' full-time staff, according to the New York Times.
Uber plans to continue operating Postmates’ consumer-facing app for the time being but is shutting down the Postmates Fleet app, which drivers use to pick up orders for delivery. After this month, orders placed by customers via Postmates will be picked up by drivers using Uber Eats. Uber, which quietly announced the move in late March, said the transition will be completed in a matter of weeks.
“I wish it was some sort of announcement email sent out months ago stating that the apps would be merged and Postmates will no longer exist,” said Taya, a Postmates courier in Texas who has been waiting eight days to complete the onboarding process with Uber. “I guess there's an assumption we knew just based on Uber purchasing the company.”
Adam Rosenthal, a Postmates courier in Colorado who will lose a source of his income when the app shuts down, has been doing deliveries in the Denver area throughout the coronavirus pandemic as a way to make up for lost hours from his job as a baker, which were reduced when businesses shut down a year ago.
Rosenthal drove for Uber Eats until he got into a fender bender and was removed from the platform last year. With two points on his license, he was still able to work for both Grubhub and Postmates — but with Uber’s acquisition, his options for delivery work have been reduced to just Grubhub.
“They say I’ll be able to drive on Postmates … until they take over operations,” he said. With Postmates, Rosenthal was able to get same-day deposits in his bank account for any ride he completed before 11 a.m., but he can't do that with Grubhub, which makes him worried.
“It just means I’ll have to work so much more during the week to push money into my account,” he said. “There’s days I need to drive before I can put gas in the car and buy food for myself and the cats.”
Matthew Miller has a clean driving record, but he’s been waiting two weeks now for his approval from Uber Eats. Would-be gig workers have been experiencing issues with background check delays over the last year, which Uber has said are tied to pandemic-related government shutdowns and court backlogs. Miller said he had been working 35 to 40 hours a week on Postmates, averaging around $1,200 a week before taxes. But now when he opens the Postmates Fleet app, there’s no work available and a pop-up message directs him to Uber.
“They sent me several automated emails saying the background check is taking longer than normal,” he said. “I have a perfectly clean record, so I’m not sure what the holdup is.”
In addition to lost earnings, Miller said the delay also means he’s not accruing driving hours to qualify for Uber’s health insurance program, which drivers qualify for after 15 hours of active driving per week.
“That’s why I do gig share — I’m able to get reimbursed on healthcare,” he said. “The quarter for the health insurance stipend started three or four weeks ago. ... By the time I get approved, I’m not going to make my stipend.”
In the meantime, Miller is living off savings and waiting to hear back from Uber, he said. “It’s frustrating.”
While Uber famously pushed back against fingerprinting drivers for background checks in Austin, it has also been criticized for not doing enough to vet drivers and protect passengers in the past. While food delivery drivers don’t carry passengers in their cars, Uber said its standards for approving drivers are meant to prioritize the safety of customers and merchants.
Uber, which saw a 53% drop in rides during the pandemic, is still not profitable after over a decade of operation. Recently, the company off-loaded its expensive self-driving car division and has been making a series of acquisitions in the food delivery space. The Federal Trade Commission scrutinized Uber’s acquisition of Postmates, slowing the deal down slightly with a “second request” for information last September.
The FTC made a similar request regarding Uber’s planned acquisition of Drizly, a Boston-based alcohol delivery startup, according to an email reviewed by BuzzFeed News that CEO Cory Rellas sent staff.
“In short, the government/FTC needs more time to look into the acquisition and its implications,” Rellas wrote in the April email. “Given the expected process, our best guess timeline is late summer or early Fall for the official close. While we had hoped for a quick resolution given the nascency of the category and clear math/actions to show that this is not anticompetitive, we are not surprised by the longer timeline as Uber receives quite a bit of attention from the regulators and headlines alike.”
Uber declined to comment on its interactions with the FTC but said it expects the deal to close in the second half of 2021. Drizly didn’t immediately respond to a request for comment.
Steinbaum, the economist, published a paper in 2019 on the role of antitrust in Uber’s control over the labor market. His concern now is that, without intervention from the FTC, we’ll see more acquisitions in the food delivery space as adding fees to restaurant deliveries is now Uber’s most likely path to profitability. Steinbaum is also concerned that, in reviewing the Postmates deal, the FTC put consumer interests ahead of protecting workers.
Lance Peterson, one of the workers impacted by the acquisition, has been among the most productive food delivery couriers at Postmates. About a week ago, he received an email from the company, which said, “We’ve crunched the numbers, and it’s official. You’re in the top 1 percent of all Postmates.” He’d started working as a courier after he lost his job as a head cook at Denny’s due to the pandemic.
But despite his high standing with Postmates, when he tried to make the switch to Uber Eats, he got rejected. With no other source of income, he’s not sure what he’ll do for work next.
“I have drug charges from three years ago," he said. "I’m a recovering addict. I pled my case, but they don’t care.”
Correction: Just Eat acquired Grubhub for $7.3 billion. An earlier version of this story misstated the terms of the acquisition.