Food delivery company DoorDash has said it’s reevaluating how it pays workers after outcry over the company’s policy of using customer tips to subsidize base pay.
In a series of tweets, DoorDash CEO Tony Xu said it had become “clear from recent feedback” that the company’s policies weren’t popular. Under DoorDash’s current system, tips left by customers via the company’s app are used to make up the minimum payment that DoorDash promises its workers. Many customers said they felt tricked by the policy, and had assumed that tips went directly to workers — not to help DoorDash’s bottom line.
Xu said that in the near future the company will change this practice. “[T]he new model will ensure that [workers’] earnings will increase by the exact amount a customer tips on every order,” said Xu. “We’ll have specific details in the coming days.”
2/ But it’s clear from recent feedback that we didn’t strike the right balance. We thought we were doing the right thing by making Dashers whole when a customer left no tip. What we missed was that some customers who *did* tip would feel like their tip did not matter.— Tony Xu (@t_xu) July 24, 2019
4/ Going forward, we’re changing our model - the new model will ensure that Dashers’ earnings will increase by the exact amount a customer tips on every order. We’ll have specific details in the coming days.— Tony Xu (@t_xu) July 24, 2019
The CEO’s careful wording in this tweet suggests that whatever new system the company introduces will have to be scrutinized closely. Promising that “earnings will increase by the exact amount a customer tips” sounds good, but it’s not quite the same as simply saying “we’ll pay drivers a minimum fee and any tips from customers will go on top of that.”
Other delivery companies have engaged in this practice in the past, such as Instacart, but have since changed their policies. Instacart, Postmates, and Uber Eats say that customer tips are not used to subsidize workers’ base pay, while Grubhub and Seamless (which are owned by the same company) say that “drivers keep 100% of their tips, and their per-order earnings are determined independently and separately from the tips they receive.”
One service where the policy is unclear is Amazon Flex. The company told Slate that delivery workers “earn $18-25 per hour, including 100% of tips” but this doesn’t make it clear whether or not those tips are used to subsidize pay. Earlier this year, the LA Times reported that Amazon uses customers’ tips for exactly this purpose, which the company has not denied.
Of course, the practice of using tips to subsidize wages is not new. In the US it’s known as a “tipped wage,” and often affects workers like servers, waiters, and bartenders. But extending this misleading and unfair practice into the tech world is not an inevitability.