In a move that shouldn’t be news but somehow still is, a startup delivery company will start giving its workers the tips that customers leave for them.
San Francisco-based delivery service DoorDash is amending its counterintuitive tipping policy, which involves withholding a portion of customers’ tips to help the company meet guaranteed per-delivery minimums for couriers.
The strange system first made headlines this spring, raising eyebrows but failing to engender policy change. In March, the city of San Francisco’s Office of Labor Standards Enforcement (OLSE) even told Recode it was looking into the matter. But nothing changed until yesterday: In response to more public outcry following a New York Times article addressing the tipping system, DoorDash CEO Tony Xu vowed to change the policy — which is roughly as follows:
Since 2017, DoorDash has guaranteed a minimum payment amount for each delivery. So, rather than direct tips given by customers to the specific DoorDash deliverers for whom they were left, the company used customer tips to ensure that each delivery met the minimum guaranteed by the company. From the Times article, for which reporter Andy Newman worked as a a DoorDash courier:
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.
In hindsight, DoorDash, which was valued at $12.6 billion in a recent funding round, was slow to change course. This spring, during the first round of scrutiny over the tipping system, grocery delivery startup Intstacart changed its similar policy more quickly. By contrast, Doordash didn't relent until last night, when Xu took to Twitter under pressure with the announcement.
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