- DoorDash is being slammed by people accusing it of misleading tipping practices.
- As a New York Times reporter found out while delivering for the startup, sometimes customer tips don’t always make it to the worker.
- The company has a guaranteed minimum payment for each delivery, and tips sometimes make up part of that.
- A DoorDash representative said the company was always perfecting its payment structures and in most cases contributed more to a delivery person’s guaranteed minimum than customers, many of whom do not tip.
- Visit Business Insider’s homepage for more stories.
A New York Times reporter recently hit the streets to deliver food for DoorDash, and he was startled to realise something professional couriers have pointed out for months: The company’s in-app tipping option wasn’t as transparent as it might seem.
On his first delivery, the Times reporter Andy Newman was guaranteed a minimum of $US6.85. The company has an assured payout for its delivery people, known as Dashers, on every order, it explains online, but tips aren’t always added on top of that total.
“A woman in Boerum Hill who answered the door in a colourful bathrobe tipped $US3 via the app,” Newman said. “But I still received only $US6.85.”
That’s because some tips don’t always make it to the courier, despite common notions of how tipping, a common practice since the 17th century, works in service industries.
“If the woman in the bathrobe had tipped zero, DoorDash would have paid me the whole $US6.85,” Newman said, noting that he made more from DoorDash than the other delivery companies he worked for during a few days in the spring. “Because she tipped $US3, DoorDash kicked in only $US3.85. She was saving DoorDash $US3, not tipping me.”
DoorDash explains its policy in a help article that’s available for Dashers. That article is not visible to customers from the order screen.
If an order’s total plus tip doesn’t meet the minimum, DoorDash kicks in more pay to hit that threshold. But if the total is less than that minimum, the tip covers the gap, instead of being tacked on top of the minimum as consumers have been conditioned to expect.
Notably, the explanation says unequivocally that “you will always receive at least $US1 in DoorDash base pay plus 100% of customer tips.”
A DoorDash representative told Business Insider that the company’s new payment model, adopted in 2017 and most recently amended in June, cost the company more than the previous model and was based on a dynamic algorithm that considered things like restaurant distance, customer distance, and delivery times for each order.
“We guarantee Dashers will earn a minimum amount, including tips, for completing each delivery,” the representative said. “This ‘guaranteed minimum’ – which Dashers see before accepting any delivery – is based on the estimated time and effort required to complete that delivery. Dashers tell us they value knowing the minimum they will earn up front, and our model is designed to make the guaranteed minimum fair for every delivery – including the vast majority of orders where DoorDash provides a pay boost to ensure the Dasher receives at least the guaranteed amount.”
The person added that the company contributed more to the guaranteed minimum than customer tips did on 65% of orders.
Still, customers online said they felt misled by the practice and urged fellow diners to tip in cash to guarantee their tips made it to the worker.
Seriously, just pay people a living wage. But, since that isn’t going to happen, if you feel like tipping, tip directly to the driver at the door.
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Delivery apps like DoorDash are using your tips to pay workers’ wages https://t.co/m8afxLBV7O
— Jesse Taylor (@Broximar) July 22, 2019
No Doordash! No!!! That money is not for you! That money is for the poor shmuck who burned gas to bring me food I'm too lazy to go out and get!
Bad DoorDash! BAD!!! (wacks phone with rolled up empty takeout containers) BAD DOORDASH!! BAD!!!! https://t.co/XYURO1vLoV
— K.Waza (Commissions Closed 2/4 Slots Full) (@KWaza94874843) July 22, 2019
On Reddit, customers were just as furious.
In a blog post last month, as pointed out by Quartz in its previous coverage of DoorDash’s tipping policies, the company’s CEO and cofounder, Tony Xu, defended the practice.
“Providing this guarantee upfront means that Dashers are more likely to accept all kinds of deliveries because they know what their earnings will be even if the customer provides little or no tip,” he said. “As a result, customers receive their orders faster and more reliably, which in turn generates more opportunities for Dashers.”
Politicians have also criticised the practice, however, with at least one local New York lawmaker drafting legislation that would force companies to be more transparent about tipping practices.
DoorDash, one of multiple delivery startups competing in a crowded space alongside big names like Uber Eats, is valued at more than $US12 billion by its venture-capital backers, according to PitchBook data. In May, the company announced a $US600 million funding round to continue to grow beyond its pool of 1,000 cities.
Like Uber and Lyft, which recently went public, DoorDash is most likely facing intense pressure from shareholders to reach profitability. The smaller a company’s expenses, of which paying delivery workers is a big fraction, the easier it is to become cash-flow positive.
“As we grow, we will stay true to our values and our mission of connecting people with possibility,” the company said in a press release at the time, “and, trust us, we’re just getting started.”