While the food delivery giant promised that "driver's keep 100% of their tips", in reality their policy did not work that way. Instead of applying the tip as a gratuity to the driver’s base pay, DoorDash and Instacart sometimes used those tips to pay a driver’s base rate.
Essentially, the policy worked as follows:
DoorDash offers a guaranteed minimum for each job. For example, an order could guarantee a driver at least $7.00. And if a customer tipped, for example $2 via the app, the driver would still only receive $7.00.
But if the customer did not tip anything, DoorDash would have still paid the $7.00. Because the customer tipped $2, DoorDash kicked in only $5.00. She was saving DoorDash $2, not tipping the driver.
While DoorDash claimed to be remodeling it's tipping policy, it reportedly is not actually changing the way it sometimes applies tips to drivers’ base pay. (According to Fast Company reports DoorDash pads drivers’ base pay with tips on 85% of orders.)
However, the company claims to have made driver payments more transparent by breaking down each order so drivers can see exactly how much of their pay comes from DoorDash and how much is from the customer’s tip. The company will also pay drivers more for longer trips, and will add “occupational accident insurance” in case drivers are injured while working.
D.C. Attorney General Karl Racine brought charges against DoorDash on Tuesday, accusing the company of pocketing tips meant for workers and misleading customers about where their money was going. Racine is seeking to recover millions of dollars in tip money customers paid through DoorDash over two years under its previous model, which the attorney general’s office called “deceptive.” The lawsuit alleges DoorDash’s disclosure about its tipping model was “ambiguous, confusing, and misleading because it encouraged consumers to tip, but did not disclose that a consumer’s tip would, in the vast majority of circumstances, make no difference at all to a Dasher’s pay and would only go toward subsidizing DoorDash’s share of Dasher pay.”
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