Delivery apps like DoorDash are using your tips to pay workers’ wages

Photo: DoorDash

When you order food through an app and tip the worker who delivers it, you’d be forgiven for thinking that the money you give goes directly to that person. But in reality, some delivery apps use your tip to make up the worker’s base pay — essentially stealing the money you’re trying to give someone to maximize their profits.

This isn’t a new practice by any means, but a recent report from The New York Times highlights how DoorDash, the most popular food delivery app in the US, enforces it.

Here’s Times reporter Andy Newman:

DoorDash offers a guaranteed minimum for each job. For my first order, the guarantee was $6.85 and the customer, a woman in Boerum Hill who answered the door in a colorful bathrobe, tipped $3 via the app. But I still received only $6.85.

Here’s how it works: If the woman in the bathrobe had tipped zero, DoorDash would have paid me the whole $6.85. Because she tipped $3, DoorDash kicked in only $3.85. She was saving DoorDash $3, not tipping me.

It’s worth noting that this is not some novel form of exploitation. DoorDash’s policy is the equivalent of a “tipped wage,” a common practice in America where employers pay workers less than the minimum wage and rely on tips to make up the payments they owe. Apps like DoorDash are essentially just extending established bad labor practices into the world of tech. (And this is before we get into the wider debate as to why tips, in general, suck.)

But just because something is common doesn’t make it fair. Stories earlier this year from NBC News and the Los Angeles Times highlighted how Instacart and Amazon Flex also use tips to make up pay. One consumer advocate described these practices as “completely deceptive.”

Following outcry, Instacart scrapped the policy and promised to retroactively compensate workers. But DoorDash and Amazon Flex didn’t budge. They still use tips to make up base pay on some of their deliveries. Even more annoyingly, it can be difficult for workers to know when this is even happening because of a lack of transparency in how they’re paid (DoorDash, though, recently rolled out changes to make the source of earnings clearer).

The Verge reached out to other firms in this sector to check their own policies. Postmates, Grubhub, Seamless, and Uber Eats all confirmed that customer tips are not used to subsidize workers’ pay.

The battle for fair treatment of delivery workers is bigger than just tips, of course. It’s about guaranteed wages and whether or not companies will recognize these individuals as full-time employees, with all the rights and responsibilities that this entails. In the meantime, if you want to make sure your delivery worker gets your tip, here’s a simple hack: use cash.

Update Monday July 22nd, 1:00PM ET: Story had been updated to add information about tipping policies for Postmates, Uber Eats, Grubhub, and Seamless.

Comments

I think what’s being done is appalling…but how is this different from what restaurants do (in states that have a lower tipped worker laws)?

DoorDash’s policy is the equivalent of a "tipped wage," a common practice in America where employers pay workers less than the minimum wage and rely on tips to make up the payments they owe.

It’s not. This whole system needs to go.

As far as the restaurant business goes, I agree it needs to be changed, but I dont know about completely scrapping the system. Many restaurants operate on thin margins and rely on good tips to cover labor costs. There are alot of great arguments for scrapping tips: better income security, potentially less harassment of waitresses, increased pay, etc. The question is not "Why is it a good idea", but rather "What will be the unintended consequences of changing the system?"

We’ve seen mixed results in San Fran and Seattle with the increased minimum wage. I just dont know that we have enough evidence to show its a good idea across the board.

Then MAYBE meals need to cost more. As far as I’m concerned, if you can’t afford to tip, you cannot afford to eat out. The price of doing business ought to be rolled up into the cost of the meal.

I agree. The point I was getting at is that we dont know what the effects of increased prices would do to the industry. Some restaurants in Seattle started including a service fee to the price off food to help offset the cost of the increased wages. Others just closed all together.

I guess my question would be, are people willing to start paying $15 or even $20 for a Bic Mac meal? What about mid-range restaurants which are typically $15 to $20 per plate that now have to start charging an average $30 or more per plate? Sure some people would, but others wouldn’t be able to afford McDonalds anymore. With an increasing COLA across the country, will people even be able to afford those prices let alone want to? If the increase in price lowers the demand will restaurants be able to stay in business to pay their workers the higher minimum wage?

All good questions without enough data to really answer them. The system needs fixing for sure, im just not sure "scrapping the system" is the right answer.

Mcdonald’s doesn’t use tips so you shouldn’t be used in your argument.

A minimum wage increase would affect restaurants employees across the board which was the point of my example. In the context of the article and the tipping discussion though you are correct, thanks for pointing that out.

This is a straw man that corporations use all the time to justify not paying employees a fair wage. We have had increases to minimum wages several times and we have never had a negative impact on the overall economy. Not even once. Corporations aren’t going to simply decide to stop operating just because of thinner margins. They will adapt just as they expect us to. It actually is massively impactful to the most vulnerable members of society, while not doing much to people who are already in stable positions. The ultimate win win for people.

Mcdonalds barely have employees anymore. Most got replaced by tech.

How is it different when meal costs $30 or when it costs $20-25 but I’m "required" to give $5-10 tip?

Tipping culture is just plainly bad – it’s putting pressure on workers who need to get tips to even have decent minimal wage, it’s putting pressure on customers who are expected to give standard tip even if service was bad or tip even higher when it was good.

You do not tip clerk in grocery store. How is it different from waitress in restaurant? Except that someone decided that restaurants are "tips based" type of service.

I hate argument that I’m a bad person if I don’t tip waitress because it’s a significant part of her wage. Hell no, it’s restaurant fault that they don’t pay their staff enough. If they need to increase price of the meal so be it. I’ll decide upfront if those prices are acceptable for me or not. But don’t bloody shame me into paying your workers’ wages.

Tipping culture is an atrocity, plain and simple.

Do we tip the plumber? How about the computer tech? How about the accountant?

Oh you people are about to say "no they are paid a living wage" – actually no that’s not true. Can you pay the rent in a major city on just Geek Squad wages?

If you answered no, then no that’s not a living wage. Then you SHOULD be tipping that kid who charged you $60 to format your hard drive.

Yes, I would rather the cost of the meal go up and that be used to pay the severs instead of tips. That makes much more sense and stops the assholes who don’t tip.

Then if you have that attitude, then those who don’t tip the ever-increasing perception of what the tip should be – some say 25% is the minimum, others say it’s 30% – then you know what…I’ll add my name to the list of people who’ll only eat out on special occasions…which is the way it should be.

Don’t say it’s 15%. Talk to waiters and they’ll always say no tip is too small. more more MORE!

If you can’t afford to pay your workers enough with the prices you charge, your business plan doesn’t work. I as the customer don’t care if I’m paying 10 bucks with a 2 dollar tip or 12 dollars with zero tip, and the fact is with the latter the server will get more because they don’t have to gamble with whether someone will subsidize their wage.

Or they’ll get less because taking orders and delivering food is a minimum wage job otherwise. A standard tip on a $40 meal is $8. If someone turns multiple tables in an hour that just multiplies from there.

That’s assuming they tip, that the meal actually reaches 40 dollars, and that you have a consistent volume. once again the gamble I was referring to. All this system does is provide uncertainty to workers about making ends meet. A stable income(even a minimum wage income, because minimum wage would increase to a living wage) is a better option for those making less than minimum and having their wage subsidized.

The server may get more. I always tip cash, and while I’m sure most waiters puts their cash tips on their taxes, some do not.
I’m curious if younger (I’m over 50) folks don’t tip with cash? my 19 year old only uses his card.

We tried to pay tips with cash for a while, then some managers decided to add 20% tip on the credit card after we left. We ended up paying 40% tips for some meals. We now only pay with cards.

I worked in restaurants when I was younger. Each has its own systems. Some let the servers keep all their tips, some pool the tips and equally divided amongst the team members, some places have a "tax" system that if your tips are above $100 that night, the house gets 10% cut of your tips.

I don’t live in a state that allows tip credit. Wage theft is also a criminal offense that can land the boss in jail time.

It would be interesting to know how this applies. Most of the delivery folks are independent contractors. Technically I’m not sure if most wage laws even apply to them.

Exactly. I am sure DoorDash and other predatory employers have lawyers that tell them just how to design these schemes to be legal.

this would be as if the restaurant did not give them any hourly wage at all. If you’re subsidizing your own hourly wage, you’re not really getting paid. You’re only acquiring tips after they have paid for the min wage threshold.

So this is significantly more back stabbing.

Some strippers have to deal with this. They have to pay a fee of their nightly tips to the establishment. Portland now has a strippers union and they have gone on strike before.

So….you are telling us it is best NOT to tip on any of these apps, as the company is essentially stealing the tip and has to cover the pay, plus the delivery person has no idea if the purchaser has tipped at all?

That’s how I read it. Zero reason to tip with Doordash, according to what’s laid out in this article.

Since the first reports of this being done by Instacart, I’ve gone to tipping entirely with cash upon delivery when using these delivery apps. Guarantees the money intended as a tip is really a tip.

I’m taking this as either tipping with cash or not tipping at all.

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