Delivery apps like DoorDash are using tips to pay workers’ wages | Hacker News Reader

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

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75 pointsoblib57 comments

I'm confused why this has become a story again. Recode reported this back in March and there was a bunch of controversy about it raised back then, with Instacart reversing course and DoorDash doing nothing.

I think it speaks more to how quickly we get outraged and forget than anything else.

Because DoorDash still hasn't reversed their policy and because a lot of people still don't know that DoorDash does this.

People also don't know that restaurants do this. People generally are not aware of, and do not care about, the specifics of labor practices outside of their own industry.

Sounds like it's a good thing that we're seeing more reporting on it then.

I think the thing that's making it look a lot worse for Doordash is their hypocrisy in things like this: https://blog.doordash.com/introducing-project-dash-bbc61ac0c...

the critique goes :

1. rip off workers 2. workers are poor, cant afford food 3. launch BS "anti-hunger" initiatives which address about 1% as much hunger as they cause, but make customers feel like they are doing a good thing using the service.

it's not unlike how big oil companies like BP run tons of advertisements how they are so "invested" in renewable energies like solar, spending a tiny fraction of the money they gain by profiting off of generation of greenhouse gasses and also dumping millions of gallons into the gulf of mexico every now and then.

"restaurants" do not normally do this because it's illegal in most places for people not involved in the service to take any portion of a tip, and a lot of people know this. those that don't often find out quickly when they tell their stories at the bar or wherever.

Previous threads:

https://news.ycombinator.com/item?id=19109455

https://news.ycombinator.com/item?id=19122521

https://news.ycombinator.com/item?id=19099474

https://news.ycombinator.com/item?id=19097719

https://news.ycombinator.com/item?id=19029801

https://news.ycombinator.com/item?id=18853232

Amazon Flex does this as well. I signed up to do deliveries last year to see how it worked, and on a couple occasions gamed it such that I was able to deliver an order I placed to myself (which is really just ordering from a nearby restaurant and hoping you get the offer). The advertised pay I would get for the delivery before accepting it was $7-12 (the range is supposed to account for tips, and across all deliveries, when everything settled it was almost always the low end of that range). With Amazon Restaurants, you had to tip when you ordered, and couldn't change afterwards, and my tip was $3. When everything cleared, I got $7, and I knew $3 of that was my own tip to myself. Had I tipped $0, I would still have gotten $7. I always felt it was a crummy thing to do to people -- your tip was just making Amazon give the driver less money. Not being able to change the tip also sucked, as I don't like tipping when I haven't received anything yet. That's more of a "name your price" service fee.

Amazon has dropped out of the restaurant game, but they still probably do this for Prime Now and Whole Foods (package deliveries aren't eligible for tips). The funny thing with restaurants was during peak times, when they didn't have enough drivers, they'd send out guaranteed $22 offers to delivery maybe $20 worth of food, which I always pounced on as it was incredibly easy money. It's no wonder they couldn't keep that business going.

Tips sometimes worked out well, though -- on some Prime Now routes where it was maybe $20-30 guaranteed, I'd get over $60 after tips. So they weren't always keeping everything to themselves. I could never figure out the rhyme or reason behind any of it.

> Amazon Flex does this well.

I feel like you intended this to be "Amazon Flex does this AS well"

... which is the difference between saying "they ALSO do this" and "they do a good job at this".

typo, fixed

Odd that someone downvoted me AFTER the OP stated it was a typo and fixed it.

Also odd that someone has already downvoted this comment.

Attention downvoter: You should probably downvote my other comment here too: https://news.ycombinator.com/item?id=20502359

Would you please follow the site guidelines? They ask you not to go on about downvotes. Yes, they're annoying, but everyone gets them, and it's not a good reason to add noise to HN.

https://news.ycombinator.com/newsguidelines.html

Do you know if the tip was for delivery or for the restaurant?

It's for delivery.

What comes next? Tipping the garbage collector or the postman for doing their basic work, so the company can save a few bucks on his wage?

In some places, with nicer people, people probably without MBAs, yes, garbage people and their mail person will get a tip at the holidays.

Note that lots of restaurants do this too. Federal law lets an employer steal the first $5.12 of tips and many states have similar laws.

From wikipedia:

"The United States of America federal government requires a wage of at least $2.13 per hour be paid to employees that receive at least $30 per month in tips.[4] If wages and tips do not equal the federal minimum wage of $7.25 per hour during any week, the employer is required to increase cash wages to compensate.[5]"

It's phrased to sound like a top-up but it's theft in my opinion.

Laws by definition mean it is not theft, but yes, this practice is widespread, legal and has been around far longer than the new tech-oriented contract workforce.

I think the difference is this:

randome example from above DeliverDash offers driver $7-12 range.

DeliverDash pays $7 with no tip, costing them $7

DeliverDash pays $7 with $3 tip, costing them $4

DeliverDash does not pay $2.13 hourly.

DeliverDash does not even have employees doing deliveries. They are contractors.

Am i reading this wrong?

do you consider servers not declaring 100% of their tips theft as well?

What exactly are you arguing here?

That jobs where most of the pay is in tips cut both ways: sometimes you don't get paid minimum wage, but it's cash so you declare your own taxable income.

I agree.

I'd like two things:

1) Tips to actually be tips, and OPTIONAL.

2) Real wages that are static for the restaurant (a base wage, calculated to properly compensate the employee without tips).

Please stop adding a hidden tax to items on menus.

It works like what you mentioned in most of the world but for some reason, it works differently in United States.

You're gonna have to explain that one more

Restaurants advertise an hourly rate ($7.25/hr or $15/hr, whatever) but in reality it is $2.13 + tips.

In NYC the tip credit is something like $5. Which means employers have the option to pay $10-$15 (min wage in NYC is $15) when employee is also paid tips. When the employee’s paycheck is calculated, and their (tips + wages) / hours < $15, then the balance is paid by the employer. In NYC, it is therefore illegal to pay less than $10/hr in wages. https://www.labor.ny.gov/formsdocs/wp/CR146.pdf

the difference there is that the wage doesn't change with the amount of the tip, and that consistent wage is communicated up front. Yes, the tip-wage sucks, but surprisingly it's more honest than this.

DoorDash also has terrible customer service which caused me to stop using them long ago. This policy in particular should be illegal without disclaimer (I'm intending to give money as a tip to my dasher, not fund DoorDash Inc) and is atrocious business practice.

This is just what tips are.

People (in the US) are used to tipping in restaurants but many don't realize that in almost every case the restaurant is using those tips to top up the wages they should be paying the servers anyway.

So the restaurant can pay the server much less than the minimum wage - your tips just make up the difference until the server makes some minimum. What DoorDash is doing here isn't any different except that servers usually manage to make more in tips.

In conclusion, tipping culture sucks and the sooner employees start paying decent base wages the better.

If you're going to tip, do it in cash and hand the money directly to the person that you're tipping. It is a fairly safe assumption that a third party collecting tips is going to pull some nonsense on that worker.

Tipping $0 on the site with the intention of handing cash to the driver means the delivery payout (which includes the site tip) displayed to drivers will be lower. Drivers are more likely take your delivery job if it has a higher payout. I don't know if the system breaks out the site tip in the delivery payout. If it did, people could enter a magic number to signal to drivers that they intend to tip in cash on delivery.

I’ve been setting my tip in app to be the number I intend to tip in cash and then I just 0 the tip out afterwards. Don’t use apps that don’t allow me to change the tip after the fact (but hopefully drivers don’t get dinged for that change somehow)

Do these apps have freeform text boxes, "special instructions" or whatever? Could put a note in there, or make it your middle name displayed with the order, "Bob ITipInCash Smith"

Just another nail in what should be coffin of the general "tipping" culture. If I enjoy the food, I should be able to tip the cook, why I need to tip someone who's job is to drive the order to me?

Servers generally tip out a percentage to the guys behind closed doors. That means cooks, dishwashers, etc.

how do you know it's the cook's recipe and preparation process and not that of a head chef or manager? The "cook" could just be pushing some buttons they were told to push for all you know.

because you apparently don't want to go pick it up with your car and your time. are you really being serious?

This is why, instead of essentially promoting the next wave of "too-big-to-fail" monopolies, we should be trying to franchise things like this.

I had the idea a while back when someone I knew was getting the run around by Uber.

If someone developed a platform that catered to franchisees instead of end-users (and contractors) it would be easier for everyone. Easier to price the service, easier to pay the workers, easier to negotiate, easier to run the business in a smaller scale.

So instead of Uber or DoorDash having 2,000,000 contractors, they have 10,000 franchises with each one maintaining it's own affairs. Everybody wins!

why would that make anything better? sounds like you would just add an additional rung of people who don't actually drive anywhere but still need to be paid.

I think the savings from reduced liability and simplified corporate structure would offset the costs. Let's face it, Uber doesn't make money as it is and neither do Uber drivers once you factor in all the expenses.

But if you can shift the liability for driver satisfaction and compensation off of Uber and onto it's franchises suddenly Uber isn't making 10,000,000 transactions per day. They're only making 10,000 transactions per month. That's money making interest for Uber instead of drivers. Also, Uber no longer makes money from rides. They make money by selling franchise rights and access to the platform for franchisers. The franchise is responsible for turning a profit from rides, and also for ensuring their employees are compensated.

There would also be an increase in efficiency. Currently my friend starts off 30m south of Boston for Uber, but her rides typically take her north of Boston within a few hours. Uber doesn't care how far out of her way she's going. When she inevitably shuts off her app she must then drive 2 hours to get home. If each franchise had it's own "turf" this could be organized and reduced. The result is less wasted fuel/time for the drivers and a smoother ride because drivers stay in areas they're comfortable and familiar with.

So basically, after "disrupting" cab companies, Uber would be transitioning into a software vendor for cab companies.

I guess so. It would throw both business models a lifeline and help to stabilize the supply/demand problem (right before automation creates a whole new supply/demand problem).

ah, I thought this was for sure a repeat, but apparently only some places changed when this first broke earlier in the year...

"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)."

they say 'tip in cash', but I never have the physical cash to tip. This always brings me anxiety when I dont have the physical small bills to provide. I would ensure I use a platform (as mentioned in the article, like grubhub or seamless) that doesn't garnish the electronic tips for pay.

It's gotten to the point where I almost always use a card to pay for things, but I also have some cash with me most of the time (on the order of $50, including $5s and $1s) just for occasions like this.

I went to the bank and got an envelope of $5ers that I keep around just for delivery drivers now.

I'd love to see how much DoorDash's "tip" revenue has declined since this seems to now be much more widely known.

Always pay the tip in cash to avoid this kind of tactics from companies.

Restaurants do this. They are required to pay minimum wage if the $2.15/hr + tips doesn't average out to be at least minimum wage. As a restaurant owner, you can add lots of hours at $2.15/hr before you have to pay anything extra out of pocket.

That's how they are able to force waitstaff / bartenders to do setup / cleanup for $2.15/hr.

I think this should just be consolidated into the original article discussed https://news.ycombinator.com/item?id=20490687. The verge really isn't adding much

The thread you're linking to only has 2 comments.

The website lets you pay $0 for tip so you can tip in cash. I haven't found a way to set the tip in the app. Unfortunately, the website is much less reliable than the app and frequently has issues.

As a relatively frequent customer of DoorDash, I have a pet theory working. I have tried this "pick $0, tip in cash" approach and it works fine for the driver - they get the money, I get the satisfaction of knowing they got the whole tip, and I get to extract the maximum value from all the VC money subsidizing these delivery companies.

But I have also seen that I am now getting deliveries where I am 3rd or 4th stop and by the time the food arrives, it is cold. My conspiracy theory is that doordash is trying to drive me away from their platform because of my $0 tips. Anyone else notice this when tipping $0?

both good reasons for your future boycott of door dash! Are there other food delivery services who have clearly explained fee structures?

I applaud this article for calling this what it is... Theft.

Then don't tip.

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