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Comment by gringoDan | Hacker News Reader

This doesn't change anything. DoorDash will lower the base pay of the orders, meaning the total compensation for Dashers will remain the same.

DoorDash has a model for what it considers "fair compensation" for an order. Since the company can see exactly what the customers tip in advance, they'll just subtract the tip amount from their previously calculated "fair compensation" and show that base pay / tip breakdown to the Dashers. DoorDash isn't going to suddenly increase its Dashers' pay by 50%.

If you want to actually compensate the Dashers, tip $0 in the app (raising base pay) and hand them cash at the door. That seems to be the only way to get around this policy.

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It does change something. DoorDash's old policy, weird as it is, reduces variability of daily pay for the Dashers. It literally put a derivative structure onto the Dasher pay that reduces volatility -- the pay was cash plus a call option on the tip. Now they will get cash plus the tip. Obviously DoorDash will tune their base pay, but they can't meet the prior model's mean and variance at the same time. How Dashers balance those two is unclear, but generally people need a higher mean to accept higher variance.

The problem is that the old policy only works if the customers don't understand it, and maybe even seems generally unethical.

It was very unethical. Calling something a tip implies a lot in the US and in most other industries the tip legally can't be taken by the employer and compensation has to at least total to the minimum wage.

Wasn't what they were doing exactly the same mechanics as how typical tipped employee salary work, just at a different threshold?

Eg, in Mass, it looks like tipped employee minimum wage is 4.35, and tipped wage plus tip must be $12/hour. If the employee doesn't get any tip, the employer has to foot the difference.

So for all practical purpose, all the tips you give up to $12/hour are simply saving the employer money but don't change anything for the employee unless they do dodgy shit like not declaring cash tips.

Yeah, the whole system is bullshit which is why we should abolish tips altogether in favor of proper minimum wages (or higher for professions that usually get a lot from tips like bartenders)

Restaurants have to make up the difference for the whole pay period, not per-order, which means any individual tip goes 100% to the waiter. And restaurants expect that they don't have to make up the difference because waiter pay after tips is expected to exceed minimum wage. So the rule where the restaurant has to make up the difference is just the loophole that lets them get away with paying less than minimum wage in the first place.

Whereas DoorDash's model was set such that you had to tip over $10 for the dasher to see a single cent of it. This meant that nearly all tips went to DoorDash instead of to the dasher, because I have to imagine most orders don't have a >$10 tip on them. And this was calculated per-order instead of per pay period, which mean that, as a customer, your individual tip was going to the company instead of to the dasher.

> Restaurants have to make up the difference for the whole pay period, not per-order, which means any individual tip goes 100% to the waiter.

That is definitely not a useful place to use "which means".

In other words, customers noticed that a fair tip is more than they want to pay, so they got mad at DoorDash instead of paying their servant.

And you are here, blaming the customers instead of DoorDash for taking money intended for the dashers?? Might as well go pick up the thing myself, or hell, just make my own food at that point, then neither you or the company will receive even a cent. It is disingenuous to characterize the customers here as masters and the dashers as servants. You provide a service of your own will and customers pay for it.

Tipping over $10 on a $20 order is not anybody's idea of a "fair tip".

Doordash iirc took the tips out of /every/ transaction not just the initial 5-10 dollars per hour (the difference between minimum wage and tipped minimum wage) like restaurants do so they were profiting from every tip. Restaurants only really get the benefit of the first couple tips given each hour and depending on the restaurant cost, the ratio of servers to tables and the turnover rate the first 2-4 tips of every hour likely cover the difference the restaurant is making with anything else going to the customer (I'd love to have some actual numbers here from servers but the math makes sense). So in general unless it's a slow time your tip probably actually goes to the serving staff instead of just benefiting the restaurant.

Exactly. I didn't really understand the outcry, unless people in the USA just don't understand fully how tipping works. It's exactly the same model that restaurants use.

> unless people in the USA just don't understand fully how tipping works.

Every "outrage" in the US consists mostly of shit people don't understand. That doesn't mean they're wrong about the cause, but you can be "right" for the "wrong reason".

In this case, yes, DoorDash employees are getting screwed. At the -same time-, DoorDash is doing nothing weird or outside of the norm.

The solution is wrong. People are trying to get 1-2 companies to make tipping a little less bullshit, when its tipping itself, across the entire country, that is broken.

One important distinction to me is DoorDash took benefit from every single tip while restaurants only benefit on the first couple tips until the difference between minimum wage and the tipped minimum wage is negated. After that all tip benefits go directly to the person being tipped where people expect it to go. Generally, depending on a lot of variables, after the first handful (I’m ball parking 2-4) of tips that gap should be covered and most times servers should see way more than that in tips.

I think it's more likely that you don't know how tipping works in restaurants. While the restaurant can take tipping in account when setting their hourly wage, they cannot garnish, in real time, larger or smaller portions of each individual tip a waiter earns on each ticket.

That's just a difference in model, and "gig economy" vs traditional. I'm not saying they work identically - they can't. But it obviously didn't start out that way with restaurants, and I doubt it will with DoorDash for long. Once they have an idea of average tips in markets, expect them to set a flat per delivery rate that is much lower, and let tips be tips.

Yes, it's the same. Ultimately the worker has two paymasters who also pay each other and money is fungible. The faux moralism is just the two parties -- corporate, and customer, jockeying for how to split the money the worker earns. And the poor worker doesn't even get a voice.

I tend to agree, yet I also believe if I'm not mistaken this is kind of how servers at restaurants work too. They have some minimal base wage, then tips. If their tips do not take them to minimum wage, the employer must pay the difference to get them to minimum wage. In essence, we as customers are subsidizing the restaurant owners to get their employees to at least minimum wage pay. So the question is why are we just now getting outraged when this has been being done to people for a while in certain places, and is still happening to servers but it's somehow not complained about that I'm aware of.

edit: looks like it depends on which state you're in in USA on this. Mostly West Coast seems to have 'sane' ones: https://www.dol.gov/whd/state/tipped.htm

Generally though once a server has gotten a couple tables (2-4 maybe but it depends a lot on the local tipping culture and the restaurant) done all of the rest of the money tipped is all extra and unless it’s a really slow day most tips are going to the server. DoorDash applied their adjustment to every single order so unless a driver was tipped more than a certain amount (I’ve heard $10) they never received the tip.

Also there’s a decent amount of talk about how bad tipping is and talks about getting rid of it but it’s a culturally ingrained thing so it’s not going to go easily, especially as it benefits restaurant owners so they’re unlikely to change unless there’s a lot of social and business pressure to do so.

All of what you say seems basically true, I still don't understand why the tipping subsidizing what restaurateur should pay as wages isn't even seen as much of an issue but DD drivers should be a special case, is all, other than "we're more used to it at restaurants so it's fine"

Most tips actually go straight to the employee after the first few dollars tipped every hour where DoorDash took 100% of tips below $10 on every order.

For example: In my state of NC for example minimum wage is $7.25/h and tipped minimum wage is $2.13/h so any money tipped after the first $5.12/h is all going to the employee. $5 worth of tips isn't that much to get per hour even averaging across a whole shift that includes both a mealtime rush and some off hours.

It's not a matter of agreement, it's a violation of federal labor law for people not involved in the service from taking any portion of a tip. Tony Xu was taking parts of tips to reduce the company's wage commitments.

And my point was in various US states this is apparently legal to do if you trade Tony Xu for some restaurant owner and DD drivers for servers. So why has it been Ok for restaurants to do this? Does a different law apply to DD situation?

It's been OK for restaurants because the tipped wage was a fixed number.

You say Tony was taking tips, Tony says he was grossing up workers who don't earn enough tips. The whole outrage is people want to pay less than the job is worth and then blame Tony for it from his side.

No, the model was to pay $X unless there's a tip, in which case Tony takes it and pays $X-$tip (unless the tip is over 100%?). Management is taking tips, which is hella illegal and has been (to varying degrees) for quite some time, certainly since before DD existed. tl;dr: wage+tips, not wage-tips.

It's unethical, but only to the customer, not the deliveryperson. Except to whatever extent market wages are unethical.

Yes, but that's unethical enough to condemn, isn't it? I mean, I was personally horrified that the "tip" that DoorDash had been soliciting with that attractively placed button was in fact really a tip to the parent company and not the dasher. I feel defrauded, and would really like that tip money back.

Whether tips or regular wages are better or not is an endless argument, and it doesn't seem like dashers are particularly exploited relative to other gig economy jobs.

But still... that fake "tip" button was designed to exploit my emotional desire to fairly compensate low wage workers to goose DoorDash's revenue numbers, and that sucks.

They don't work for DoorDash however, they're contractors who are agreeing to terms with DoorDash.

Most people don't really get the contractor/employee split that all these companies take advantage of and even then the word TIP has certain implications. If I tip someone well I expect the worker to get more not for the company employing or contracting them to pay less, I want the money to go to the person not the company.

Even in the US where tips go against wages it's not so bad, generally the first tip or two will cover the difference and workers are probably doing way better than that. Doordash on the other hand applied the same thing to /every/ order.

It's going to be a sad day if the argument in court is that the customer is "tipping DoorDash" (and not the actual delivery contractor).

I don't think that justifies wage theft.

Didn't say it did, but it's a very relevant point in all of these discussions as normal wage law can get tricky when you're involved with contracted services.

DoorDash can claim they aren't paying for the time, but for the service. And how long that service takes is the responsibility of the contractor.

Is it dirty? Very. Does that make it untrue? No.

So the first step in any of these cases is to get these gig economy apps to admit that they're just trying to circumvent wage law by classifying employees as contracted services.

They can offer a "performance"-based weekly "bonus" which would be the difference for under-tipped people. Normalizing the same pay on a weekly (or daily) basis.

> but they can't meet the prior model's mean and variance at the same time.

They could just like, pay them a monthly wage, like everyone else in the civilized world?

Like everyone else not in gig-economy jobs. The "individual contractors" hiring structure is established in almost every country (where legally possible) for companies like Uber, food delivery, etc. This is not US-specific phenomenon.

But isn't this how almost all tipping already works?

I worked at restaurants where I had to report my tips or share them. If I dipped below minimum wage for the month, the restaurant was supposed to add whatever difference was needed (never saw it happen, btw).

So if DoorDash lowers the base pay, I don't see why anyone should die on DoorDash's hill when the base pay of all restaurants around them is a hilarious $2.15/hour. DoorDash pays a minimum of $1 per delivery no matter the tip.

Before people get too angry at DoorDash, they should realize this is ubiquitous.

We're never going to evolve away from tipping culture if our only trick is to get outraged at one company at a time that makes the mistake of having the spotlight fall on them.

It doesn't have to work like this. We could pay folks a proper wage, and let them also keep their tips. When I was a pizza delivery driver, I got paid an hourly wage that started at minimum wage and increased after certain periods of work experience. In addition I got a delivery fee per order delivered during a shift, and on top of that I got to keep all tips given to me by the customers. So in practice, I was probably making double minimum wage on a moderately busy night. I was aghast that the in-restaurant wait staff got paid a significantly smaller hourly rate and were expected to make it up in tips.

Just to clarify that all tipping in the US works like this. The rest of western countries pays a fair wage and then tip is a bonus the waiter gets to keep (or shares with other staff in some contexts), but it's not expected to be part of pay.

Counter example, Washington state doesn't allow tips to be counted towards employee's wage (https://www.nolo.com/legal-encyclopedia/washington-laws-tipp...)

Washington state‘s minimum wage for tipped workers is also the same minimum wage as other workers though too.

Im a server in WA and im making 11.50 plus my tips. In the last state I was in I was making 2.50 plus tips.

But I'm guessing that in either job, you didn't have to take each individual tip to your manager so they could review it and decide how much to take for the house.

> Just to clarify that all tipping in the US works like this.

Wrong, only a subset of states with corrupt labor practices allow this.

It's not even all tipping in the US. Several states work the way you describe.

So what, it raises the waiter minimum wage from $2.50 an hour to $7.25 an hour? When the average waiter is making / expecting $10-$50+ an hour, it's still the situation OP describes where tips make up the vast majority of their pay. There are restaurants that do the higher prices no tips thing, but I am not aware of any states where you can show up at a random restaurant and get paid $30 an hour to wait tables?

Minimum wage in Oregon is $11.25/hr with no special considerations for wait staff. Tips are always on top of the hourly wage and do not subsidize the wage paid by the restaurant.

Having never been to Oregon: the interesting follow up here is, are you as a customer less incentivized to tip with this knowledge? As a Texas resident who has worked in food service in the past, 20% is near obligatory barring subpar service (Texas is one of the states that pays $2.15 an hour for waitstaff).

Nope. 15-20% is still pretty standard.

Also, in my experience, our prices are not higher than the $2.15/hr states.

Social inertia is shockingly powerful.

Servers make a lot while bussers and janitors and cooks get screwed

Agreed. That being said, everyone knows that waiters/waitresses make their pay from tips. I think that most people had the expectation that delivery drivers were making base pay, and any tips were on top of that - the equivalent of handing the pizza delivery driver a couple of bucks when they get to the door. This was not the case, and certainly not communicated clearly to customers.

The fact that restaurants confiscate and aggregate all tips to divide them among the wait staff and the never-actually-tipped kitchen staff is also not communicated to customers. It is a matter of restaurant policy.

Also illegal, so report a restaurant if you know they’re doing that.

It is legal. It happens everywhere and it's even required by law in New York.

https://fortune.com/2014/03/20/starbucks-new-digital-tip-jar...

From my reading of the law the vast majority of tip pools are not legal, to wit:

>Tip Pool: The requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips, such as waiters, waitresses, bellhops, counter personnel (who serve customers), bussers, and service bartenders. A valid tip pool may not include employees who do not customarily and regularly received tips, such as dishwashers, cooks, chefs, and janitors.

I haven’t yet seen a tip pooling scheme that didn’t also include back of house, i.e. chefs/cooks, and often supervisors or managers which cannot be included by federal law.

But your point stands, my statement was overly broad.

> Before people get too angry at DoorDash, they should realize this is ubiquitous.

I know it's ubiquitous, I'm just enjoying seeing someone raked over the coals for it and I look forward to the angry mob moving on to everyone else who profits from this scummy practice.

Some states don't have a tip credit like Minnesota. They get minimum wage no matter what, plus tips.

I've worked as an hourly employee at a bar before. This isn't in the US. I was paid minimum wage, before tips as it's not legal to "make up the difference" where I live. If a customer gives a tip, the employee goes home with the tip additional to minimum wage. If an employer decides that I got $50 tips and minimum wage was $40, they don't get to keep my wages, they have to give me $40 and the customer tips bump my days earnings to $90. I find it bizarre and more than a little sad to see a first world country thinking it's OK to skim wages just because customers tipped.

This. The only way I can see things changing is to not tip. I know this will anger some people here but I just ordered on grubhub and tipped 0$. Why would I tip more if I already pay 6$ of delivery fee? Also, why would I tip a percentage in general? Can’t a waiter appreciate my 5$ tip without making a face every time like I’ve under tipped them?

If you think this is outrageous, you should consider that many people are like me and waiters get stiffed all the time by us. So every time you’re paying a tip you’re covering for me too. Isn’t this unfair?

Wouldn't that be easy to discover using the same method the NYT used to find this in the first place [1]?

> 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.

[1] https://www.nytimes.com/2019/07/21/nyregion/doordash-ubereat...

But that's OK. They should lower the amount that they offer for a delivery to not include the tip. And then drivers will refuse to work for them and they'll be forced to increase it. Supply and demand.

No, they shouldn't. If these were actual employees, that would be theft. The only reason it's not is that DoorDash has decided to classify them as "independent contractors", which don't receive the same protections.

It's not theft. It's the exact same way that it works for waiters. From a post elsewhere

In a restaurant

- The waiter is guaranteed normal minimum wage.

- The owner guarantees they will pay a minimum of <whatever waiter minimum wage is; less than normal minimum wage>

- The waiter gets tips from patrons, which generally brings them over normal minimum wage

- If the waiter's tips do not bring them above minimum wage, then the owner is required to pay them an amount that would bring them up to minimum wage.

With DD, it works more or less the same way, with the difference being that the minimums (upper and lower) are per delivery, not per hour.

If fact, odds are the DD deliverers are going to be worse off now, because DD isn't going to guarantee them a minimum amount; rather, they'll present "we pay you X + you get the tip which is likely around Y". And if the tip isn't enough, the deliverer winds up making less. Unlike before where they got the minimum.

Restaurants give you an hourly wage that is less than minimum wage, and if that wage plus tips is still less than minimum wage, they're required to pay you the difference. If your hourly wage + tips is more than minimum wage, restaurants cannot reduce your hourly wage to compensate.

My understanding is that DoorDash was doing the opposite: giving you a guaranteed wage and then subtracting the tips from that. It's as if a restaurant were paying you an hourly wage without tips, and then accepting tips on your behalf.

If a customer had tipped 100% of the guaranteed pay, do you think the deliverer would have seen any of that tip? Or would it all have counted against the guaranteed pay?

My understanding is that

- DD provides a guaranteed wage of $1 per delivery, similar to a restaurtant's "under minimum wage" wage.

- DD provides a "you will make at least this much" rate. This is a parallel to normal minimum wage

- If the (<tip> + $1) is not at least <this much>, DD covers the difference

- If the (<tip> + $1) is more than <this much>, DD pays only (<tip> + $1)

The only real differences between that and a restaurant are - The numbers are all per delivery instead of per hour - The sub-minimum wage is $1 instead of whatever it is for wait staff ($2.50 or so?). How these numbers compare depends on how many jobs per hour there are. - The "you will make at least this much" amount varies by the delivery, vs waitstaff where it's a set number for all.

If you consider the "you will make at least this much" number to be "if you don't get tipped enough to make this much, we'll make sure to cover the difference for you", it's more clear how it's the same as for wait staff.

That's not the way DoorDash worked actually.

They offered $1 per delivery plus tips, and would increase the wage if the tips didn't meet the expectation.

If you tipped the driver $100, the driver would get $101.

If you tipped the driver $0, the driver would get $4 - $7 because DD would make up for that.

> It's the exact same way that it works for waiters.

Waiters don't pay the restaurant back if they go over minimum wage. So, no, it's emphatically not the same way it works.

And even if it were, "it's legal to screw people!" is not a reasonable nor humane response to "people are getting screwed!".

As I understand it, neither do DD delivery people.

Except that they can float the actual fee to avoid having to pay more than that because they have additional market flexibility and more information than anyone else, yes.

You are completely ignoring one huge aspect. With restaurants the expectation is that the tips are more than enough to cover the minimum wage of the waiters and therefore the waiters get paid based on the tips they collect. The actual price of the order goes to the cook. With door dash the "cook" and the "waiter" are the same person. Therefore the expectation that a door dasher only receives the tip is completely illogical. When a dasher receives a tip, the price of the order no longer represents money that the dasher receives, instead it represents the maximum amount of money door dash is taking away from the dasher and therefore also represents the minimum meaningful tip size (minus one cent).

Contractors also have benefits employees do not, such as only working when they choose to.

But that is tipping.

A waiter makes $7.25 an hour. If they receive $2 in tips, the business only has to pay them $5.25 for that hour instead. There is a lower limit (around $2, I forget the exact amount), and tipping over that limit goes to the employee, but any tips under that limit effectively go to the company.

> A waiter makes $7.25 an hour. If they receive $2 in tips, the business only has to pay them $5.25 for that hour instead.

This is false. Only a subset of states allow this corrupt practice, here's a handy list: https://en.wikipedia.org/wiki/Tipped_wage#State_law

I counted only 7 states where it is not true based on the state laws and 1 state where it was not true for large employees. It is generally true in most states in practice, and is how tipping works per federal laws. I should have probably have mentioned I was speaking to the federal law and local/state/city laws can work differently in some areas.

Exactly, 43 states are a subset of 50.

I feel like we are getting a bit deep in semantics now.

Even if it was true in all 50 states, we could claim it is true in only a subset of those 50 states since a set containing all 50 states is a subset of itself. Had the claim been a proper subset instead, this wouldn't have been the case.

And even if it was true in all 50 states and all smaller governments therein, one could claim it as false because some businesses have to run under franchise rules that disallow the practice. I think such a sentence should be interpreted as talking about the general case of what is acceptable (acceptable in that people do not hold nearly an equivalent level of protest at the federal law on tipping and on organizations that follow it or state level varieties that allow a similar practice as they do for DoorDash's practice).

Fair. However, painting tip theft (I'm just calling it what it is) as the norm nationwide is wildly inaccurate. For example, it's a crime to do this on the entire west coast.

He was saying that's how it effectively works, and he's right.

The federal minimum wage for tipped employees is $2-ish with the caveat that if an employee isn't making on average $7.25 for the pay period when factoring in tips, the employer is legally obligated to make up the difference.

So if an employee's tips average out to the difference between tipped minimum wage and regular minimum wage, then all you've done is save the restaurant money. The employee was going to get that amount regardless.

It's only when the tipped amount exceeds the difference on average does the employee come out ahead.

In that case, DoorDash will guarantee $3.85, knowing full well you'll make $6.85 for the order.

Edit - I'd expect they'll show something like the below

Total pay: $6.85

Guaranteed base pay: $3.85

Tip: $3.00

>If you want to actually compensate the Dashers, tip $0 in the app (raising base pay) and hand them cash at the door. That seems to be the only way to get around this policy.

I am sorry but we have to let you go, because our customers do not seem to like you.

It would show up in their metrics as a particular customer (or percentage of customers) never tipping, not a particular driver never getting tipped.

What reason do you have for claiming that total compensation will remain the same? The article certainly doesn't say that.

If they did that, it would inevitably be found out and lead to an even bigger scandal. That would be worse than doing nothing.

The other advantage of tipping in cash is that all the money goes to the Dasher, the government doesn't get to skim off any of that money.

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