DoorDash Tip-Skimming Scheme Prompts Class-Action Lawsuit Seeking All Those Tips That Didn't Go To Drivers (gizmodo.com) 117
An anonymous reader quotes a report from Gizmodo: DoorDash's years-long scheme to use customer tips to subsidize its workers' wages is finally catching up to the company. And hot on the heels of renewed outrage about its tip-shaving scheme, a new class-action lawsuit is taking aim at the company for misleading its customers about how their tips were used. The suit, filed this week in the U.S. District Court for the Eastern District of New York on behalf of Brooklyn resident Alan Arkin and "others similarly situated," claims that that DoorDash failed to make clear to its customers that tips they gave through its app to couriers were not being allocated as they were intended to be, and that had customers known this, they would not have tipped through the app.
The suit defines a member of the class as someone who has "used DoorDash and paid a tip through the Door Dash app within the statutory period." "DoorDash has engaged in unlawful and deceptive acts, practices and misconduct by misleading Plaintiff and the consuming public to believe that the tip amount entered on the DoorDash app would be received as a tip by the DoorDash delivery workers for their service," the filing states. "DoorDash knew, and failed to disclose, that the tip amount entered by Plaintiff and other consumers on the app was received by DoorDash, in whole or in part, and used to subsidize its cost of doing business." Gizmodo explains the tipping policy that got DoorDash in hot water: "Through a system introduced in 2017, DoorDash can pay as little as $1 per delivery to a worker depending on the amount that a customer tips on the order. This system promises a guaranteed earning, for example, $8, that the dasher will make on a delivery. If a customer does not tip, DoorDash will pay out $1 plus the remaining $7 it takes to make up that promised wage. However, if a customer does tip, their money will be used to subsidize the worker's guaranteed pay. In other words, customers are essentially paying DoorDash -- not the delivery worker -- with their tip."
DoorDash CEO Tony Xu said last week that the company would change its policy, but didn't get into specifics.
The suit defines a member of the class as someone who has "used DoorDash and paid a tip through the Door Dash app within the statutory period." "DoorDash has engaged in unlawful and deceptive acts, practices and misconduct by misleading Plaintiff and the consuming public to believe that the tip amount entered on the DoorDash app would be received as a tip by the DoorDash delivery workers for their service," the filing states. "DoorDash knew, and failed to disclose, that the tip amount entered by Plaintiff and other consumers on the app was received by DoorDash, in whole or in part, and used to subsidize its cost of doing business." Gizmodo explains the tipping policy that got DoorDash in hot water: "Through a system introduced in 2017, DoorDash can pay as little as $1 per delivery to a worker depending on the amount that a customer tips on the order. This system promises a guaranteed earning, for example, $8, that the dasher will make on a delivery. If a customer does not tip, DoorDash will pay out $1 plus the remaining $7 it takes to make up that promised wage. However, if a customer does tip, their money will be used to subsidize the worker's guaranteed pay. In other words, customers are essentially paying DoorDash -- not the delivery worker -- with their tip."
DoorDash CEO Tony Xu said last week that the company would change its policy, but didn't get into specifics.
A class action? (Score:1)
So, Doordash skims the tips from drivers and keeps them. So instead of taking action to give those tips to the drivers, we're having a class action suit, which will ensure the drivers continue to get nothing, while the tips all go to the attorneys.
What a brilliant idea. That'll really make those drivers whole again.
Re:A class action? (Score:4, Insightful)
No, no, no, the drivers can have their own class action, and between the two we can hit doordash for double damages to make it properly punitive.
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The drivers undoubtedly signed a modern "independent contractor" agreement which required them to resolve any disputes with binding arbitration, arbitrator to be selected by contracting party and costs to be borne by "contractor", and prohibits them from filing lawsuits. Chief Justice Balls-n-Strikes has ruled these contracts perfectly constitutional and enforceable, so the drivers will get no help from the courts.
Re:A class action? (Score:5, Informative)
the drivers continue to get nothing, while the tips all go to the attorneys.
If there is no payoff for the attorneys, then they won't take the case, and nothing will change.
If there is a payoff, much of the benefit will go to the attorneys and little to each driver, but at least DoorDash will have to pay up and there will be a precedent to disincentivize other companies from abusing tips in the future.
But they may have a hard time winning in court. It is unlikely that DoorDash was breaking any laws. Their best hope may be for a quick out-of-court settlement so DoorDash can avoid more bad PR.
Re:A class action? (Score:5, Interesting)
It is unlikely that DoorDash was breaking any laws
The claim is for deception. That is almost certain to fly, because no reasonable person would expect that a tip goes to the company running the restaurant, not the waiter. You might expect that the waiters share tips or something, but not that the restaurant simply pockets it. Or - as in this case - reduces the waiters salary by the amount that you tipped.
The claim is made not from the perspective of the drivers - but of the customers. And that is why it will fly. Towards the drivers this shitty company can claim "it was written right here, on page 576 of the contract in this small print that looks like an underline". I doubt they can uphold any such defense against the customers.
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If not enough people tip their waiter, the employer pays the the difference to bring them up to minimum wage. It's not supposed to happen and employers tend to get pretty pissy about it. But they technically have an obligation to make up the difference.
Whenever you tip your server at a restaurant, you're relieving the employer for their obligation to pay their employee.
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Whenever you tip your server at a restaurant, you're relieving the employer for their obligation to pay their employee.
That's not universally true. I don't know how common it is, but I definitely know a couple of places where the tips are pooled separate from the paychecks and split between the staff, kitchen, front-of-house, and barback included.
Once I was an early customer at a pretty empty bar when a waitress rolled her eyes when the manager badgered her to take her paycheck. Seeing my confused look she said, "We get paid $2.50 per hour, and I only worked one 8 hr shift last week. That's a check for less than $20, and no
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"... I definitely know a couple of places where the tips are pooled separate from the paychecks and split between the staff, kitchen, front-of-house, and barback included."
In some states, sharing tips between front of house and back (e.g., kitchen) is illegal [eater.com]: "The change in the law means that restaurant operators in most states — including the seven states that do not have a tip credit (California, Oregon, Washington, Nevada, Minnesota, Montana and Alaska) — are now free to ask servers to tip
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I almost forgot that the USA is this backwater place where people actually work for free plus tips. I don't think that exists anywhere else in the world.
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The most important thing about this lawsuit is to determine if anything illegal even happened.
They provided a guaranteed tip to their drivers, which doesn't sound that bad to me. But their only "wage" was $1 per delivery, which seems completely insufficient in many areas. Delivery drivers are only guaranteed a $2.13 hourly wage by federal law, but I'm sure many states/cities have higher minimum wages. If that $1 per delivery doesn't cover minimum wage, I hope this is found to be illegal. But if the $1 does
good, sue them into the ground (Score:5, Insightful)
What I hate about this kind of company behavior is the lack of leadership compass in knowing what is right and wrong, and instead treating every resource (person) as an experiment to see what they'll accept or not. And if they don't hear enough complaints, must've been ok to do.
You can read it in their apologies and the positive spin: "We heard loud and clear the frustration when your compensation didn’t match the effort you put forth."
Heard you loud and clear? What is this, like the American Idol voting contest? Daytime Emmy awards, or public opinion poll, where we have to be asked what we like to be paid?
A proper apology would be: "We know what we were doing was wrong, and we were wrong to do it, and we will not do things like that in the future." Not, "it seems you didn't like what we did, so we'll do something different."
Makes you think they won't apologize for doing fundamentally wrong things until they get called out by public opinion. What types of issues should a company know are not ok / illegal, and what issues are subject to public approval or measuring reception? Shouldn't a CEO know these and apologize accordingly?
Or maybe that is the role of regulation and government to keep the amoral corporate compass calibrated.
Re:good, sue them into the ground (Score:4, Insightful)
Solution: criminal charges applied to _all_ contributing parties, including investors - without leniency. Once you start locking up a few of these investors, who have millions to just throw away, you'll see them reverse course real quick about turning a blind eye to shady crap like this. This means all these VC-funded "angel" companies with a good idea (DoorDash is a great business "idea"), will have to show some actual effin' integrity toward employees.
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Do keep in mind that it you have a 401K, there is a chance that YOU are an investor! Which means that those criminal charges you're calling for may affect, well, you....
There're reasons for Limited Liability Corporations to exist. Protecting investors from the misbehaviour of people they have absolutely no control over is just one of the reasons....
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Apologizing properly means admitting fault, something which they aren't allowe4d to do on behalf of their shareholders.
Re:good, sue them into the ground (Score:5, Funny)
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That's what's fucked up with all of this in a nutshell.
Honesty - even honestly admitting you fucked up - gets punished. Being a lying, cheating asshole gets rewarded. Look no further than that and you understand why the corporate world is the fucked-up place that it is.
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This is one of the points Deborah Tannen made in her book The Argument Culture. In some cases, for example in a motor-vehicle crash, what the injured party mainly wants is an apology. But the other party won't apologize, because that could be used against them in a lawsuit -- and so they end up in court, because they didn't apologize.
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Not wage theft (Score:1)
They were giving people a gaurenenteed delivery fee of 6.95. Any tips over the flat rate they got to keep. What the hell is wrong with that?
maybe they should pay a flat rate of zero and let them live on tips alone?
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This is just a bunch of socialists bitching because they don't like the fact everybody doesn't get paid the same. Totally ignoring the whole reason why have free markets and capitalism is because it creates efficiency in the first place that rage the living standards of EVERYBODY. Even the dumb asses who build skills that result in oversupply in the market and then take jobs for shit pay. Sure- you might make $12 / hour, but that $12 / hour goes a lot farther than it would under a socialist system an everyb
Re: Not wage theft (Score:2)
Shhhhh
They've stopped rambling and now you're prodding them. They probably just got back to sleep under their comfy bridge after eating a goat. It's pretty obvious this wasn't an actual debate with a solid position. It was their chance to rant-n-shine for the rest of their like minded trolls...errr...."friends". Anything we may have to add will simply be lost as they plug their ears and chant "MAGA" 3 million times before masturbating all over their guns'n'ammo.
(Yep, just made a bunch of baseless assumption
Re:Not wage theft (Score:5, Interesting)
Because it was advertised as a tip to the driver, not as an optional subsidy to the booking company.
People thought they were following the American practice of tipping for good work.
So no socialist whatever, just straight taking something owed to the driver.
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I hope they get sued hard for outright wage theft.
DoorDash is only the tip of the iceberg. Uber and Lyft are less than transparent about tips, and Amazon's Flex program is even worse.
That said, until a company like Amazon really gets slapped hard for this practice, the abuse of ordinary people by corporations will continue, as the fines are viewed as merely a cost of doing business.
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the lack of leadership compass in knowing what is right and wrong,
They know what is right and wrong. They know if they were drivers, they wouldn't be happy about that kind of tip.They chose to do it anyway, which is why we have laws.
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I owe Bob $20. Alice gives me $10 and tells me "Give this to Bob as a gift". I give Bob the $10 and Alice's $10 and say that I've repaid the debt. Obviously I've stolen here. You might argue over whether I've stolen from Alice or Bob, but I've pretty clearly committed a crime here.
So can we get Doordash prosecuted?
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but I've pretty clearly committed a crime here.
No, no you haven't.
Someone handing you something and telling you to do something with it isn't a law. You are under no legal obligation to do what they tell you. Do you have a moral obligation? Maybe. But being immoral is different from being criminal.
If Alice gives you $10 and tells you to do something with it, unless you've got a legally binding contract with Alice, you're under no obligation to do what she tells you. In this case, you're $10 richer, and when you give Bob $20, you've fulfilled your debt t
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Tipped workers have a lower minimum wage, with tips expected to make up the difference between that and the actual minimum wage. If you don't make enough tips to make up the difference, the company employing you does. I'm really not seeing how this is any different.
I've never lived in a state with that shitty system, so it's hard for me to see them as anything but theft. But Doordash doesn't exist in an hourly pay system, so it's not relevant.
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Tipped workers have a lower minimum wage, with tips expected to make up the difference between that and the actual minimum wage. If you don't make enough tips to make up the difference, the company employing you does. I'm really not seeing how this is any different.
I've never lived in a state with that shitty system, so it's hard for me to see them as anything but theft. But Doordash doesn't exist in an hourly pay system, so it's not relevant.
Yes, actually you have lived in such a state, because this is Federal law. [dol.gov]
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https://www.lni.wa.gov/WorkplaceRights/Wages/Minimum/
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California still has a tipped minimum wage law on the books. But they recently bumped the tipped minimum wage to be nearly the same [minimum-wage.org] as the regular minimum wage ($11 vs $12). It's forgivable that people aren't aware of the recent developments of this unusual situation.
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> If you don't make enough tips to make up the difference, the company employing you does.
First of all, that's how the law is written, but in practice that pretty much never happens. Wage theft is an epidemic in the service industry and complaints frequently lead to constructive dismissal, and since those same people are some of those who need every last penny they bring home to keep afloat, the vast majority of them will just suck it up and take the hit to remain (relatively) stably employed. Same wit
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I wouldn't say they are BETTER, because the idea of a tip is that it goes to the worker over and above what they're already earning. Simply paying the tip to the company they work for unless the value of the tip exceeds the guaranteed piecework rate is deceitful to the customer who tipped, who expects it goes to the worker. And as mentioned, the restaurants who screw their waitstaff are breaking the law, the problem is enforcement.
The DD driver is getting a guaranteed fee for a delivery, but that's a give
driving food out is not the same as restaurant (Score:2)
driving food out is not the same as restaurant work. Most food drivers don't have commercial auto insurance as it cost to much for sub min wage + tips.
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Doordash is required by law to make up the difference. The problem is the model for tips is bad and we shouldn't have it.
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Having gotten service in countries that don't have incentives like tipping, I am all in on a system that has financial incentives to your server based on direct observable performance.
Different culture (Score:2)
California pays tip earners the same or nearly the same as minimum wage. You technically can stop tipping there and people will still make minimum wage. Although they probably all count on making significantly more than minimum wage and rely on America's tipping culture.
Unions (Score:1)
This is why we have unions and labor laws: so some knowledge fueled, "gotta be the next hotshot" attitude, gets what they deserve when they screw people out of what is deserved to them.
Arbitration Clause (Score:1)
I don't see how this can go anywhere unless Door Dash's lawyers really, really, really (and I do mean really) suck.
SCOTUS doesn't change their minds (Score:2)
On the other hand Congress could easily repeal the law, but we'd have to change the kind of politician we vote for. After decades of carefully crafted crooks though it's hard to go back to somebody authentic. [duckduckgo.com]
Re: SCOTUS doesn't change their minds (Score:2)
SCOTUS has lifetime appointments so a newly elected or sitting government couldn't sack the whole court and pack it with their own appointees. It also theoretically increases the independence of the justices themselves as they dont have to be concerned with sticking to party/ideological lines to maintain their position.
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Maybe an actual lawyer will weight in, but I don't think this case much in the way of teeth.
That's how tips have always worked though (Score:1)
Tips in the restaurant industry (and I have worked in it a few years when I was a student) have always gone to supplement the wages to get to at least minimum wage. Employers would pay something like $1.50 and your tips are to supplement your income to minimum wage. If you didn't make tips, your employer would have to supplement until the $7 mark.
If you're a good server working at a decent rate you can clear 8-10 tables in an hour with 5-10 tip each. Delivery was very similar where your employer paid up to
Re:That's how tips have always worked though (Score:5, Informative)
This has not been true for for delivery drivers. Delivery drivers (pizza delivery for example) have been paid minimum wage plus tips and sometimes a trip charge or delivery fee.
I worked at one of the busiest Papa Johns in the nation in the late 90s and 00s. The best night I ever had was $300 in tips on a 8 hour shift. I had something like 70 deliveries as it was a Super Bowl Sunday. I also had two very large group orders that tipped me roughly $50-60 dollars each. On any given 8 hour shift we normally took in about $50-$80 in tips with an average of around $2.00 per delivery.
Never was I consistently averaging $20-$50 an hour and I was one of the better drivers they had.
All of that was before expenses. On a busy night we could also blow through a 1/2 tank of gas, so you could also expect to spend $20 in gas. Not to mention wear and tear on your personal vehicle. Brakes and tires were a near annual expense.
I'm not complaining, we still made good money, but I think your numbers are a bit inflated.
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Just pay your people, stupids! (Score:3)
Your people/workers/employees/drones are The Public Face of your company -- PAY THEM!!!
Otherwise, you'll screw YourSelves!
Just like you've done!
STUPIDS!!!!!
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If the drivers are well-paid, they're less likely to be tempted to sample the food.
The real issue seems to be whether a food delivery service is sustainable at any legal wage. From what DoorDash did, it seems they had to pay sub-minimum wage to make the business model work,
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> "Forcing" DoorDash to pay drivers minimum wage (with drivers getting to keep the tips) may simply force them into bankruptcy, resulting in the disappearance of multi-retailer food delivery services and all their drivers losing their jobs
Unfortunately, that's the way the world works. If it's not economically feasible or unsustainable, they need to adapt - or go out of business. It's not anybody's job to subsidize them or keep them afloat even if they're "too big to fail" because that just leads to abu
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>>This is just a bunch of socialist nut jobs who don't like this system demanding the tips they were not entitled to.
Your reading comprehension skills need improvement. The plaintiffs in this lawsuit are the customers of DoorDash, not the delivery drivers. The customers contend that they were deceived into believing that delivery tips were actual tips on top of normal wages. This is a realistic belief considering that the US delivery tipping has always worked this way. Only the restaurant server busin
The problem is they deliberately mislead their (Score:3)
customers. I am one, I have Dash Pass and order from them semi-frequently as they are often the only option for delivery where I live.
They say, on EVERY ORDER, that 100% of your tip goes the driver. This is technically true, if viewed a certain way, what they do NOT tell you is this:
This is how they calculate the driver pay per delivery. [doordash.com]
As a customer, I have no way of knowing what their "guaranteed minimum" for an order is. According to subreddits and elsewhere it's an arbitrary number run through some o
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What was done to the drivers was and is legal under federal law. (Not so much in certain states that do not have a lower minimum wage for workers who commonly get tips).
It was also standard business practice at pretty much all restaurants, too, which operate under the same laws. This has been federal law for decades. Remember that the next time you eat out.
Which is why this will get tossed at the earliest opportunity.
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What state is Uber headquartered in, hmm?
What's the law in that state?
Think before you type.
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It's not standard practice in restaurants for the house to take tips from the servers.
Tip sharing is a thing, but that's not the same thing.
Delivery sites just can't make money (Score:4, Interesting)
The problem is not the wage and tip theft.
The problem is all of these delivery services can't cover their costs and pay minimum wage.
Most can't even cover their costs in the first place.
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At this point we should be asking ourselves: are they all Ponzi schemes?
Or are they precursor test firms that will alter themselves to become robot meal delivery services, as they quickly realize that meal deliveries only become economically feasible when the labor component, as well as delivery costing (electric small vehicles can park easily, and use smaller robots or drones for last 100 meter delivery) are drastically reduced.
This is the model that other "shared economy" services seem to be going towards
Tips as an expected and required part of wages? (Score:2)
The problem is only half in skimming off the tips. The other half is mandatory tipping. Mandatory (or almost mandatory) tips are a sure way to dis-incentivize proper service and a constant source of frustration between customers and workers.
Goods and services need reliable, stable and openly visible pricing for quick transactions and satisfaction of all participants. If you have ever been to a country (usually developing or third world) where grocers, convenience store owners etc. set all the prices on the
While it's good to punish DoorDash (Score:2)
This just means that lawyers get the money instead. The actual drivers will, of course, nevere see any significant portion of the money.