TECHNICAL GLOSSARY

Base Pay: Definition, Examples, and Income Planning

Base salary is very important to employees, independent contractors, and business owners. When determining wages, considering a job offer, or budgeting for your home, base salary is used to define the basis for making financial decisions.

What Does Base Pay Mean?

The amount of money received for performing a task is known as base pay, which does not include any bonuses, commissions, overtime, benefits, or other types of payments. In contrast to total compensation, which also contains health insurance and pension benefits, base pay is the agreed-upon portion of the employee's compensation that has been guaranteed by the employer, while total compensation includes all of these types of compensation.
Base pay is typically reported as:

• An hourly rate of pay
• A salary per week or per month
• A salary for the entire year

Total compensation includes a variety of other types of compensation, such as health benefits, contributions to retirement savings plans, paid vacation or sick leave, or bonuses based on how well one performed. Thus, base pay is often a percentage of the total compensation of the employee.
Employers perceive base pay to be a predictable and consistent cost that must be paid each pay period. As far as the employee is concerned, base pay provides them with a consistent source of income over time. Additionally, base pay is frequently the basis used to compute taxes, qualify for loans, and determine how much home the employee can afford.

What Is DoorDash Base Pay?

DoorDash's delivery service utilizes a smartphone application that offers users a connection with local restaurants for food delivery. Dashers, the delivery personnel, can earn an income based on the number of delivery requests they are able to fill. The minimum amount a Dasher will be paid by DoorDash is referred to as "base pay". Base pay varies depending upon the following factors: the minimum time expected to deliver a particular order; the distance to deliver a specific order; and the desirability of a given delivery. Based on their participation within the DoorDash network, Dasher's have been categorized by the IRS as independent contractors and not employees. Therefore, every Dasher will receive their delivery fee from DoorDash, minus their respective payments for self-employment tax. Any delivery fees received by the Dasher from customers will be added to their delivery fee from DoorDash.
Benefits of Gig-Based Base Pay Models
Gig-based compensation plans also provide independent contractors with flexible work schedules; the ability to choose delivery requests; clear earnings/profit from each task completed; little or no interaction with customers; and independence from any type of traditional employment relationship. Independent contractors are required to keep track of their income, expenses, and taxes, including quarterly estimated tax payments.

How Much Rent Can You Afford Based on Hourly Pay?

Typically based on the 30% Rule, housing affordability is often determined by paying no more than 30% of your gross monthly income for rent.
For example,
$20/hr x 40 hrs/wk = $3,200/mo.
30% of $3,200 is your maximum recommended amount to spend on rent ($960).
While the actual affordability can vary based on geographic area, debt level, taxes, and lifestyle expenditures; these factors are usually considered by landlords and lenders when establishing guidelines for housing affordability.