Square has agreed to pay $2.2 million to settle a class-action lawsuit which claimed that the company collected tips from customers and didn’t hand them over to its Caviar food delivery drivers. Every customer in California who paid Caviar between January 20th, 2012 to August 31th, 2015 has been notified about the settlement, as TechCrunch reports.
The lawsuit was filed in 2016 by Spencer Janssen in California. It says that customers were made to think that the 18 percent “gratuity” charge on each Caviar order would go to the driver, but that “this representation is false.” The complaint alleges that, “No portion of this ‘gratuity’ was provided to the delivery drivers.”
Square has denied the allegations, stating that drivers knew how much they were being paid and that they received their gratuities. Drivers are paid per delivery.
Caviar has since replaced gratuities with a “service fee”
The $2.2 million is to be split up as follows: as much as $755,000 will go toward Janssen’s lawyers, up to $10,000 will go to Janssen, and the remaining $1.44 million will be split among the 93,914 class members, or the customers who paid Caviar, thinking they were paying for drivers’ gratuities. The total should come out to about $15.28 per customer, which would be credited to be used inside Caviar. The settlement still needs to be approved by a judge during a final court session on September 21st.
“We have always properly compensated delivery couriers, and discontinued this practice long ago to provide better transparency around costs. We have chosen to settle this matter to avoid the cost and distraction of litigation and provide direct benefit to our valued customers,” Caviar said in a statement to The Verge.
Caviar has since replaced the gratuities line item with a “service fee,” which sounds like what the gratuity charge was in reality. The app also added a tipping option, but tips have never been required by Caviar, according to its policies.