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United States Businesses Software The Almighty Buck

Delivery Apps Like DoorDash Are Using Your Tips To Pay Workers' Wages (theverge.com) 242

An anonymous reader quotes a report from The Verge: 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 U.S., 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."
"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," the report adds. "Apps like DoorDash are essentially just extending established bad labor practices into the world of tech."

Amazon Flex also uses tips to make up pay, even after being heavily criticized for it. Instacart was the same way, but it scrapped the policy and promised to retroactively compensate workers following outcry. Postmades, Grubhub, Seamless, and Uber Eats all confirmed to The Verge that customer tips are not used to subsidize workers' pay.
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Delivery Apps Like DoorDash Are Using Your Tips To Pay Workers' Wages

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  • All I can say is wow (Score:5, Interesting)

    by 93 Escort Wagon ( 326346 ) on Monday July 22, 2019 @07:09PM (#58969440)

    Just when I think my opinion of tech "entrepreneurs" can't get any lower, a new story comes out and proves me wrong.

    • by youngone ( 975102 ) on Monday July 22, 2019 @07:32PM (#58969566)
      Tech entrepreneurs are not the problem. The problem is the American tipping culture.
      Pay people what the work is worth.
      • Re: (Score:2, Interesting)

        by Anonymous Coward

        Tech entrepreneurs are not the problem. The problem is the American tipping culture.
        Pay people what the work is worth.

        So, I've thought a lot about this ... because I dine out a lot, and I tip well for good service ... I consider 20% to be a standard tip unless the service was bad. I do this because I appreciate good service.

        I have mostly come to the conclusion that tipping takes mostly 3 forms:

        1) Cultural norms
        2) Tipping to show off/largesse
        3) Tipping out of appreciation for the work

        #1 means you come fr

        • by deek ( 22697 ) on Monday July 22, 2019 @11:05PM (#58970326) Homepage Journal

          I'll start off by saying that I live in a country that is generally non-tipping.

          Once, a good tip in the US was 10%. Which just goes to show how long it's been since I visited. Now it's 20%?! Given more time, will it then become 30%? 50%? 100%?!

          Who sets these levels anyway? How does expectation just double like that?

          This is, frankly, why I don't enjoy going to restaurants in some foreign countries. I have no idea of expectation. And then, even if I do think i have an idea, seems like it will change under me.

          Tell me beforehand how much I can expect to pay. Then bill me that amount. Nice and simple. I really don't want to stress over whether I've got tipping levels right or not. I don't want to have to figure out bizarre percentages in my head at the end of the night. This is not enjoyable to me.

          • Comment removed based on user account deletion
            • by Hodr ( 219920 )

              Because in comparison, food has gotten cheaper. So to make the same amount, your percentage needs to be higher.

              Well that's blatantly wrong. There may be a few more (smaller) items on the value menu at your favorite fastfood restaurant, but that's not the trend. That's just smoke and mirrors to make you think that 4 half-sawdust chicken nuggets for a buck is a good deal.

              In real restaurants, with servers, the prices have basically doubled in the last 10 years. Not that long ago If you went out to breakfast at Denny's, IHOP, Cracker Barrel, or any mom and pop shop you could eat like a king for $10 or get out with the

          • A good tip in the US has never been 10%*, at a normal sit-down restaurant. Table service is a 15-20% tip. Honestly, I think it moved to 20% over 15% because the math was easier. A buffet might be 10%, and counter service is usually round up to the next dollar.

            Yes, I wish taxes and tips were baked in to the price.

            *At one point there was no tipping culture, and it's possibly you are over 85 and visited as a child when 10% tips were common. But it standardized on 15% a long time ago. That said, it's poss

          • by edwdig ( 47888 )

            Minimum wage has barely changed in decades, and minimum wage for tipped workers is even less than the normal minimum wage.

            The cost of living goes up over time, and we seem to have decided on a policy that the restaurant should be contributing minimally toward your server's pay. So if you want people to serve you food, you need to contribute to their pay directly.

      • by Freischutz ( 4776131 ) on Tuesday July 23, 2019 @03:58AM (#58970892)

        Tech entrepreneurs are not the problem. The problem is the American tipping culture. Pay people what the work is worth.

        I don't think the problem is even American tipping culture so much as the fact that american business owners seem to feel themselves entitled to steal money from their employees.

        • american business owners seem to feel themselves entitled to steal money from their employees.

          I know it goes without saying, but I'm going to anyway for emphasis-

          Jesus Christ what a bunch of ASSHOLES

          Not only are they taking money from their employees, they're taking money away from their employees that was SPECIFICALLY INTENDED for those employees.

        • I don't think the problem is even American tipping culture so much as the fact that american business owners seem to feel themselves entitled to steal money from their employees.

          Just a reminder that in December 2017, the Trump administration removed regulations preventing employers pocketing tips, and now there are no federal rules against it. These regulations were most recently strengthened (but already existed) under Obama in 2011.

      • Tipping doesn't give the tech entrepreneur the right to underpay their employee the exact value of that tip! That's theft of wages. The social agreement is that you get paid a wage and the tip is on top of that wage.
        • Legally speaking, that's not true. The social agreement is between the delivery driver and the customer (and the business is not party to it). The business only agreed to make up the difference to hit a minimum total. If it's in the terms and conditions of the contracting agreement, there's no underpayment. And they're also not legally structured as an employer - so these are not wages.

      • Tech entrepreneurs are not the problem. The problem is the American tipping culture.

        So when scumbags steal tips, blame tipping. Right.

      • Tech entrepreneurs are not the problem. The problem is the American tipping culture.

        Pay people what the work is worth.

        You'll make far more money from tips in many places than you'd ever make with minimum wage (or even the much discussed "fight for fifteen").

        Unless you aim to mandate a high minimum wage everywhere.. and good luck with THAT political football... you're not going to get the support necessary from waiters/waitresses to eliminate tipping.

        If you work in one of the fast casual places... an Applebees, O'Charley's, etc... you'll make more waiting tables and serving drinks than you would in, say, stocking shelves at

        • You'll make far more money from tips in many places than you'd ever make with minimum wage (or even the much discussed "fight for fifteen").

          Bullshit. The median wage for waitstaff (counting tips) is $9.61/hr. That includes bartenders.

          Sure there are high-end waiters who would hate getting rid of tipping, but the vast majority would be better off with a $15/hr wage.

          And that data is the last data before Trump changed the rules and made it legal for managers to pocket 100% of the the tips. Oh, didn't you kn

        • If you work in one of the fast casual places... an Applebees, O'Charley's, etc... you'll make more waiting tables and serving drinks than you would in, say, stocking shelves at a Wal Mart. Especially on a weekend.

          Except those weekend earnings are dipped into to bring you up to minimum wage the rest of the week when you're only being paid $3/hr. on a Tuesday afternoon.

          In this case, it's more of a minimum guaranteed payout. And it's just as bad as Uber and anyone else. Anyone who is not an employee but an independent contractor can make a terrible deal for themselves and aren't guaranteed even minimum wage.

    • by ChoGGi ( 522069 )

      Aren't they using the same idea restaurant owners have been using for decades?

    • Sandhill Road has become a blight on our nation. They brazenly rob the poor, and have abandoned even the flimsiest pretense of social value. It's time for Uncle Sam to stomp some sociopathic venture capitalists.

      Question for the candidates in 2020: who's got the biggest trust-busting stick, and who's gonna swing it the hardest?

    • >Just when I think my opinion of tech "entrepreneurs" can't get any lower, a new story comes out and proves me wrong.

      I don't see anything wrong with it. All this outrage has it backwards. If a user tips $5 and DoorDash guarantees a minimum $10 on an order, then DoorDash pays $5 extra. I'd rather have a minimum tip than not.

    • This is why you tip in cash, to prevent these types of abuses.

  • Food delivery service uses same labor practices as restaurants have for many moons, under laws graced by multiple dynasties of both political parties.

    But tech, so unfair.

    • Other than tipping out to your bussers/bartenders I assume everything I tip staff goes to them.

      • I assume everything I tip staff goes to them.

        Why would you assume that? Tips are regularly stolen by employers.

      • It works the same with a server: there's a guaranteed minimum wage, lower than the regular minimum wage, that the employer ponies up if tips do not rise above it (e.g. no one comes into the restaurant that day due to weather). If the tips do rise above it, they don't have to pay it out. So, while the app is more transparently awful, it isn't really any more awful than the normal situation for a tipped wage employee.
    • by Anonymous Coward on Monday July 22, 2019 @07:31PM (#58969560)

      Abolish tips. Tipping should not exist. In the UK it actually doesn't exist at all.

      Tipping was initially a gesture optionally paid to service staff who offer good service. Then tipping somehow became customary regardless of the quality of service. Now it's become free money for the companies who regularly underpay their staff expecting that we're all going to tip.

      There's a new rule in this household: We don't tip anymore - no more tips. If we get good service then I'll take cash out of my wallet and hand it directly to the staff member. I won't even hand it to the establishment at all, because they clearly cannot be trusted. This is wage theft in its normalized form.

      If we order from GrubHub then I'll hand the tip in cash directly to the driver.

      This is yet another reason why nobody should be considering abolishing cash for digital-only currencies. This just forces all money through corporations, and those corporations are going to pull shitty crap like this. At the end of the day this is abuse of good will and straight up criminal wage theft. Someone should be prosecuting these companies for doing it.

      • Tipping *does* exist in the UK - its just that its used properly [www.gov.uk] as a reward and not as a wage top up. All employees have to be paid at least minimum wage, there is no adjustment made for "tipping income" so you know that at least all staff will get their full wages whether or not you tip. There are also moves to make it illegal for the employer to take a cut of tips, but currently thats not illegal.

        Its also illegal in the UK to require wait staff to cover the cost of "dine and dash", while I've heard ho

        • I could be wrong, but I believe in the US it isn't technically legal either to make staff cover a dine and dash, but it isn't enforced and staff never fight it since it'd cost less than a lawyer or finding a new job.
        • by johnw ( 3725 )

          Its also illegal in the UK to require wait staff to cover the cost of "dine and dash", while I've heard horror stories in the US of staff having to cover huge dining bills.

          There have been a couple of well-publicised incidents in the UK recently of employers requiring staff to cover the cost of dine-and-dash. The employers got a lot of negative publicity out of it, but I'm not sure it's actually illegal.

      • Tipping should not exist. In the UK it actually doesn't exist at all.

        Not true. I went to a restaurant in the UK last week that included an "optional" 18% gratuity on top of the bill, and it wasn't the first time. I seem to be seeing it more and more.

    • by 93 Escort Wagon ( 326346 ) on Monday July 22, 2019 @07:36PM (#58969584)

      With waiters and waitresses - they have a fixed hourly wage they earn, and any tip you give is added on top of that. Sometimes it goes directly to them, and sometimes it goes into a pot split by everyone on duty that night... but it's extra money they receive above the set wages their employer pays.

      What Door Dash is doing would be the equivalent of telling the waitress "we're setting your pay at seven bucks an hour, but if someone gives you a five dollar tip we're holding back five dollars from the total we pay you". It's not the same thing at all.

      • With waiters and waitresses - they have a fixed hourly wage they earn, and any tip you give is added on top of that.

        That's half true. The fixed hourly wage is a pittance (a couple bucks an hour last I looked), and if that wage plus tips doesn't add up to minimum wage the employer makes up the difference. That's clearly explained in the Wikipedia link in the summary.

        That's exactly what's happening here, except DoorDash's pittance base is per delivery rather than per hour as explained here [doordash.com].

      • With waiters and waitresses - they have a fixed hourly wage they earn, and any tip you give is added on top of that. Sometimes it goes directly to them, and sometimes it goes into a pot split by everyone on duty that night... but it's extra money they receive above the set wages their employer pays.

        What Door Dash is doing would be the equivalent of telling the waitress "we're setting your pay at seven bucks an hour, but if someone gives you a five dollar tip we're holding back five dollars from the total we pay you". It's not the same thing at all.

        Seems to me Door Dash feels entitled to confiscate money from the tips their employees get. That is a pretty shitty thing to do given the nature of American tipping culture as you just outlined it. How greedy and pathetic can a business get?

      • What Door Dash is doing would be the equivalent of telling the waitress "we're setting your pay at seven bucks an hour, but if someone gives you a five dollar tip we're holding back five dollars from the total we pay you". It's not the same thing at all.

        Except that if the tips aren't enough to raise their hourly wage to the non-tipped minimum wage (examples will use the national $7.25/hr, but it may be more locally), the employer is legally obligated to make up the difference. All tips in restaurants are u

  • by L_R_Shaw ( 5544684 ) on Monday July 22, 2019 @07:16PM (#58969480)

    I know more and more people don't have any cash anymore, but I make sure to always have a small amount of cash for tipping either from the supermarket or my credit union.

  • If you care... (Score:5, Informative)

    by Wolfrider ( 856 ) <{moc.liamg} {ta} {nortuengnik}> on Monday July 22, 2019 @07:17PM (#58969482) Homepage Journal

    o Tip in CASH ONLY, direct to the worker

    o Fight this outrage with *direct responses* to the companies that are doing this. Get it changed in court and enshrined in law if necessary.

    • by DogDude ( 805747 )
      Fight this outrage with *direct responses* to the companies that are doing this. Get it changed in court and enshrined in law if necessary.

      If you're still using the "app" then this won't do shit. If you care, you'll not use the "app" at all.
    • by tsqr ( 808554 )

      o Tip in CASH ONLY, direct to the worker

      o Fight this outrage with *direct responses* to the companies that are doing this. Get it changed in court and enshrined in law if necessary.

      The "outrage" you want to fight is already enshrined in labor law, and has been for quite a long while. The only effective way to fight it is, as you say, tip in cash directly to the worker. I personally won't even add a tip to a restaurant bill that's going on a credit card. Cash only for tips.

    • o Tip in CASH ONLY, direct to the worker

      The companies which collect the tips (gratuities as they're called in accounting) are supposed to be doing it because other people involved in the supply chain may be deserving of the tip, but only the person who directly interacts with the customers gets the cash tips. e.g. In a restaurant, the cooks, busboys, and dishwashers.all contributed to you having a pleasant dining experience. But if you leave a cash tip, it all goes to the waiter/waitress and these other

      • The companies which collect the tips (gratuities as they're called in accounting) are supposed to be doing it because other people involved in the supply chain may be deserving of the tip, but only the person who directly interacts with the customers gets the cash tips. e.g. In a restaurant, the cooks, busboys, and dishwashers.all contributed to you having a pleasant dining experience.

        Let's just hope that they are not expected to work for tips only, as the waiters are. (And the food drivers are - but is legal and in this crazy system even normal)

  • by IonOtter ( 629215 ) on Monday July 22, 2019 @07:19PM (#58969498) Homepage

    And I always try to tip in cash.

    I will admit, it's terribly easy to use that tip button, and I do it more than I should.

    But now I'll make sure to keep cash on hand to do it exclusively.

  • by OneHundredAndTen ( 1523865 ) on Monday July 22, 2019 @07:37PM (#58969590)
    And they feel virtuous doing it too. Perish the thought of suggesting giving people decent salaries.
  • Get rid of tipping (Score:2, Informative)

    by Anonymous Coward

    I was always a big tipper, actually I still am if the situation calls for it. But after living abroad for almost a decade, you realize how fucking stupid tipping is, especially when people feel obligated to do it.

    In some other counties tipping is even considered rude because you're almost saying "you probably don't get paid enough, here's a little extra cash."

  • by DogDude ( 805747 ) on Monday July 22, 2019 @07:41PM (#58969620)
    Tips are stupid. It's a dumb way of paying for stuff. It was a tremendous relief when, as an American, I visited Europe for the first time and didn't have to tip. It made eating out much more pleasant.
  • by WolfgangVL ( 3494585 ) on Monday July 22, 2019 @07:43PM (#58969624)

    Always tip cash.

  • Wage theft (Score:5, Insightful)

    by GameboyRMH ( 1153867 ) <gameboyrmh@@@gmail...com> on Monday July 22, 2019 @08:00PM (#58969728) Journal

    It's the most common type of theft and the largest worldwide by dollar amount. It's done on behalf of the rich, by a representative bald-faced and in a suit and tie, and they even keep a paper trail. Why can't we stop this?

  • Devil's Advocate (Score:5, Interesting)

    by stikves ( 127823 ) on Monday July 22, 2019 @08:01PM (#58969740) Homepage

    All these "delivery" and "taxi" companies, like Uber, DoorDash, and others lose money:
    https://news.crunchbase.com/ne... [crunchbase.com]

    They depend on "venture capital" to stay afloat. They are in fact swimming in cash [or rather burning those large cash piles]:
    https://www.nytimes.com/2019/0... [nytimes.com]

    However without opening their financials, we can only speculate. But it seems to reason that they are also losing money on every delivery to build a "network", and trying every trick to stay afloat.

    And some of the blame is on us, the customers. If we are asked to pay a "$5 delivery fee", we try to look for a "free" option to avoid that. However if we are asked to "tip $5" for the same delivery, we would gladly accept. Hence the companies change their wording to divert the funds one way or another.

    Either the fees will increase across the board, or everyone will go bankrupt in the long run, or maybe we will invent a much more efficient way of (robotic?) delivery.

  • If the woman in the bathrobe had tipped zero

    A tip from her to you was not why the woman answered the door in a bathrobe, rather, the opposite. Sorry you couldn't close the deal.

  • Again helping the poor comes down to the middle class. Where are the wealthy?
  • Two Lyft drivers told me they do not see their tips. I don't question this, but that was a few months ago. The delivery services, feh. I don't use them. Oh, sorry, Pizza Hut. And I be they give the tips to the driver.

  • These delivery services have you set a tip when you buy the food, not when it's delivered. Can you even consider it a tip? The purpose of a tip is to encourage good service. Traditionally the delivery person does a good job in hope for a good tip. Setting the tip ahead of time is like paying a ransom for service.
  • No one in the United States of America, is FORCED to work for ANY private company. Don't like how you are paid or treated, THEN QUIT! If enough people quit, and the company loses business, they will either change their ways, or go out of business. That's how private companies are suppose to operate, but, our mommy/daddy government, be it local, state or federal, comes in and screws it all up with regulation after regulation.
  • They say that 100% of your tip goes to the driver it's plastered all over their. If they're stealing the money I hope they get a class action from it. They have worse customer service than Comcast and are overpriced as fuck. They will also increase menu prices of items at restaurants and lie to you about it while refusing to compensate for discrepancies. I just have few options at the moment.

  • by Crypto Gnome ( 651401 ) on Tuesday July 23, 2019 @02:47PM (#58974262) Homepage Journal
    The described practice is NOTHING NEW and COMPLETELY LEGAL, other businesses do it ALL THE TIME.

    Is all the outrage here SPECIFICALLY at gig-economy businesses only?

    If the ONLY thing that is NEWS is "...on the internet" then you need a case of STFU dropped on your ass because you contribute no value...

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