5 ms·

This is a question with two answers. It depends on the company. There is lots of evidence of some delivery companies using your “tip” to cover the base salary

by d1str0 6y ago

This is a question with two answers. It depends on the company. There is lots of evidence of some delivery companies using your “tip” to cover the base salary of their employees. So if a driver is guaranteed $5/hr, and you tip $3, DD/UberEats/etc. will claim they only have to pay out $2 for that hour.

uoaei 6y ago
DoorDash was in trouble about a year ago for skimming tips off the top in some strange convoluted scheme that was too ingenious to be an accident. It appears they haven't changed that behavior yet, despite getting a lot of bad PR and promising they will look into it. Corporations are not moral agents. They cannot be shamed into acting to the benefit of the majority, and their promises mean nothing.
- ravenstine 6y ago
  Skimming puts it lightly. If the driver's base pay was $5, for instance, and the customer tipped $5 through the app, the driver would receive $0 in tips because PoorDash would use the tip to offset as much of the base pay as possible. That's theft and borderline fraud because the term "tip" implies that the money will go to the person responsible for delivering your food, not Tony Xu the CEO.
  - BeetleB 6y ago
    Every time this comes up I'm always astounded that most people have no idea how tips work. In a lot of states, at least for restaurant workers, this is normal practice and explicitly allowed for by law. In those states, this has been common practice since ... forever? The laws there require restaurant owners to pay the waiters such that their wage + tips combined should be at least the minimum wage. If a waiter makes more than the minimum wage in tips then the owner only needs to pay a less than minimum wage amount. See https://www.dol.gov/agencies/whd/state/minimum-wage/tipped https://www.dol.gov/agencies/whd/state/minimum-wage/tipped So as an example, in Texas, if a waiter made more then $5.12/hr in tips, the restaurant owner needs to pay him/her only $2.13/hr. The question I have is: Why are we OK with this for waiters but suddenly get upset when this happens to the drivers? Do you ask your favorite restaurants their policy?
    - ravenstine 6y ago
      > The question I have is: Why are we OK with this for waiters but suddenly get upset when this happens to the drivers? Do you ask your favorite restaurants their policy? It's not OK, and it's part of the reason why I don't often go to restaurants even though I could afford to eat at one every night. There is one difference, though, which is that restaurant staff are well aware of the nature of their pay. Most DoorDash drivers didn't realize that they were being gypped. I know this because, when I was driving for GrubHub, I would sometimes bump into DoorDash drivers and I would ask them about DoorDash's pay model. Most didn't have a clue that they were getting tipped but that the tip was disappearing into the pockets of DoorDash. I'm sure that DoorDash had something about that in 6 pt font somewhere, but not everyone will read or even comprehend that. Unless the customer asks if you got the tip, there was no way for a driver to even know if they had a tip when that tip did not exceed their base pay. At least restaurant workers know that there are tips and can see the full amount. Until this came out, a lot of drivers considered DoorDash to be supplementary because the customers were "stingy", when in fact that may not have been the case. But no, I do not ask my favorite restaurants their pay policy. Perhaps I should. EDIT: Another key difference between restaurant workers and food delivery app drivers is that customers of DoorDash almost always tip ahead of time, so it's not as if the driver can do much if anything to improve their chances of getting a bigger tip. With traditional tipping, it's implied that an advantage in being paid mostly in tips was that better service could equate to more pay. DoorDash a few years ago was taking advantage of people's common understanding of what it means to tip someone and keep both prices and costs down, with the driver being the one to get screwed and not even realize it.
      - BeetleB 6y ago
        > Another key difference between restaurant workers and food delivery app drivers is that customers of DoorDash almost always tip ahead of time, so it's not as if the driver can do much if anything to improve their chances of getting a bigger tip. With traditional tipping, it's implied that an advantage in being paid mostly in tips was that better service could equate to more pay. It is implied, but generally not the reality. The correlation is fairly poor: https://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1110&context=articles https://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?arti... https://ecommons.luc.edu/cgi/viewcontent.cgi?article=4067&context=luc_theses https://ecommons.luc.edu/cgi/viewcontent.cgi?article=4067&co... https://www.thisamericanlife.org/245/transcript https://www.thisamericanlife.org/245/transcript I think the real question is why we tip some service professions and not others.
  - devrand 6y ago
    Not exactly. The $5 will always go to the delivery driver, not Tony Xu the CEO. The problem is that they use the tips to obscure what the base pay actually is so workers didn't really know how much they'll make above the guaranteed rate. This was great if people didn't decide to tip since Tony Xu would need to cover the difference (which you use to game btw if you always put $0 tip in the app but handed them a cash tip). This is basically the same model used by restaurants to pay front-of-house staff. They guarantee minimum wage, but actually provide a lower base pay and use tips to make up the difference.
    - ravenstine 6y ago
      Correct. The base pay(let's just say $5, I don't remember if that's what it was) always goes to the driver. However, if the customer added a $2 tip, the driver paid $5 and DoorDash paid the driver $3. If the customer tipped $5, the driver got paid $5 and DoorDash paid nothing, the whole time the customer believing that the tip went to the driver and the driver believing they got no tip. As I stated elsewhere in this thread, the nature of a delivery app "tip" is different from the restaurant industry. Not only do restaurant workers fully understand how their pay model works, but they can get higher pay for providing better service. This isn't possible for most delivery apps because customers almost always enter a tip amount when they pay for the food, before the driver even has a chance to get to the restaurant. This is why customers should tip their drivers in cash. EDIT: The reason I brought up Tony Xu is because his company should be always paying its driver's base pay without taking from the tip. We can get into the semantics of who's paying who when a tip is seen as a "subsidy", but that's not how we should be seeing it in the first place. By potentially paying little to nothing for a delivery being made, DoorDash was able to keep more of its earnings from the delivery. No matter the angle you look at it, DoorDash were the ones taking home more money because of the pay model.
      - devrand 6y ago
        I'm not sure that's correct. The system worked like [1]: * Worker is shown a $5 guaranteed paid. * Behind the scenes DD picked some base pay. Let's say $1. * If the customer tipped < $4 then the worker got paid out exactly $5 with DD paying out the difference between the actual tip and the $4. * If the customer tipped >= $4 then the driver got paid $5 + tips - $4. So in your example DD paid $3 and the tip was $5 with a guaranteed rate of $5. This means that the worker would've been paid $8. I agree though, not showing the base pay was very misleading. However, tips never actually replaced the base pay. [1]: This forbes article has a screenshot of the old page describing the model https://www.forbes.com/sites/bizcarson/2019/06/27/doordash-tipping-policy-pay-model-controversy-changes/#535c35135220 https://www.forbes.com/sites/bizcarson/2019/06/27/doordash-t...
rockinghigh 6y ago
Only DoorDash and Instacart did this. UberEats never did. > As DoorDash grew to become the biggest on-demand food delivery app in the country, it began doing something unconventional with customers’ tips: It used them mostly to subsidize its payments to delivery workers. https://www.nytimes.com/2019/07/24/nyregion/doordash-tip-policy.html https://www.nytimes.com/2019/07/24/nyregion/doordash-tip-pol...

by d1str0 6y ago

uoaei 6y ago

DoorDash was in trouble about a year ago for skimming tips off the top in some strange convoluted scheme that was too ingenious to be an accident. It appears they haven't changed that behavior yet, despite getting a lot of bad PR and promising they will look into it. Corporations are not moral agents. They cannot be shamed into acting to the benefit of the majority, and their promises mean nothing.

ravenstine 6y ago
Skimming puts it lightly. If the driver's base pay was $5, for instance, and the customer tipped $5 through the app, the driver would receive $0 in tips because PoorDash would use the tip to offset as much of the base pay as possible. That's theft and borderline fraud because the term "tip" implies that the money will go to the person responsible for delivering your food, not Tony Xu the CEO.
- BeetleB 6y ago
  Every time this comes up I'm always astounded that most people have no idea how tips work. In a lot of states, at least for restaurant workers, this is normal practice and explicitly allowed for by law. In those states, this has been common practice since ... forever? The laws there require restaurant owners to pay the waiters such that their wage + tips combined should be at least the minimum wage. If a waiter makes more than the minimum wage in tips then the owner only needs to pay a less than minimum wage amount. See https://www.dol.gov/agencies/whd/state/minimum-wage/tipped https://www.dol.gov/agencies/whd/state/minimum-wage/tipped So as an example, in Texas, if a waiter made more then $5.12/hr in tips, the restaurant owner needs to pay him/her only $2.13/hr. The question I have is: Why are we OK with this for waiters but suddenly get upset when this happens to the drivers? Do you ask your favorite restaurants their policy?
  - ravenstine 6y ago
    > The question I have is: Why are we OK with this for waiters but suddenly get upset when this happens to the drivers? Do you ask your favorite restaurants their policy? It's not OK, and it's part of the reason why I don't often go to restaurants even though I could afford to eat at one every night. There is one difference, though, which is that restaurant staff are well aware of the nature of their pay. Most DoorDash drivers didn't realize that they were being gypped. I know this because, when I was driving for GrubHub, I would sometimes bump into DoorDash drivers and I would ask them about DoorDash's pay model. Most didn't have a clue that they were getting tipped but that the tip was disappearing into the pockets of DoorDash. I'm sure that DoorDash had something about that in 6 pt font somewhere, but not everyone will read or even comprehend that. Unless the customer asks if you got the tip, there was no way for a driver to even know if they had a tip when that tip did not exceed their base pay. At least restaurant workers know that there are tips and can see the full amount. Until this came out, a lot of drivers considered DoorDash to be supplementary because the customers were "stingy", when in fact that may not have been the case. But no, I do not ask my favorite restaurants their pay policy. Perhaps I should. EDIT: Another key difference between restaurant workers and food delivery app drivers is that customers of DoorDash almost always tip ahead of time, so it's not as if the driver can do much if anything to improve their chances of getting a bigger tip. With traditional tipping, it's implied that an advantage in being paid mostly in tips was that better service could equate to more pay. DoorDash a few years ago was taking advantage of people's common understanding of what it means to tip someone and keep both prices and costs down, with the driver being the one to get screwed and not even realize it.
    - BeetleB 6y ago
      > Another key difference between restaurant workers and food delivery app drivers is that customers of DoorDash almost always tip ahead of time, so it's not as if the driver can do much if anything to improve their chances of getting a bigger tip. With traditional tipping, it's implied that an advantage in being paid mostly in tips was that better service could equate to more pay. It is implied, but generally not the reality. The correlation is fairly poor: https://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1110&context=articles https://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?arti... https://ecommons.luc.edu/cgi/viewcontent.cgi?article=4067&context=luc_theses https://ecommons.luc.edu/cgi/viewcontent.cgi?article=4067&co... https://www.thisamericanlife.org/245/transcript https://www.thisamericanlife.org/245/transcript I think the real question is why we tip some service professions and not others.
- devrand 6y ago
  Not exactly. The $5 will always go to the delivery driver, not Tony Xu the CEO. The problem is that they use the tips to obscure what the base pay actually is so workers didn't really know how much they'll make above the guaranteed rate. This was great if people didn't decide to tip since Tony Xu would need to cover the difference (which you use to game btw if you always put $0 tip in the app but handed them a cash tip). This is basically the same model used by restaurants to pay front-of-house staff. They guarantee minimum wage, but actually provide a lower base pay and use tips to make up the difference.
  - ravenstine 6y ago
    Correct. The base pay(let's just say $5, I don't remember if that's what it was) always goes to the driver. However, if the customer added a $2 tip, the driver paid $5 and DoorDash paid the driver $3. If the customer tipped $5, the driver got paid $5 and DoorDash paid nothing, the whole time the customer believing that the tip went to the driver and the driver believing they got no tip. As I stated elsewhere in this thread, the nature of a delivery app "tip" is different from the restaurant industry. Not only do restaurant workers fully understand how their pay model works, but they can get higher pay for providing better service. This isn't possible for most delivery apps because customers almost always enter a tip amount when they pay for the food, before the driver even has a chance to get to the restaurant. This is why customers should tip their drivers in cash. EDIT: The reason I brought up Tony Xu is because his company should be always paying its driver's base pay without taking from the tip. We can get into the semantics of who's paying who when a tip is seen as a "subsidy", but that's not how we should be seeing it in the first place. By potentially paying little to nothing for a delivery being made, DoorDash was able to keep more of its earnings from the delivery. No matter the angle you look at it, DoorDash were the ones taking home more money because of the pay model.
    - devrand 6y ago
      I'm not sure that's correct. The system worked like [1]: * Worker is shown a $5 guaranteed paid. * Behind the scenes DD picked some base pay. Let's say $1. * If the customer tipped < $4 then the worker got paid out exactly $5 with DD paying out the difference between the actual tip and the $4. * If the customer tipped >= $4 then the driver got paid $5 + tips - $4. So in your example DD paid $3 and the tip was $5 with a guaranteed rate of $5. This means that the worker would've been paid $8. I agree though, not showing the base pay was very misleading. However, tips never actually replaced the base pay. [1]: This forbes article has a screenshot of the old page describing the model https://www.forbes.com/sites/bizcarson/2019/06/27/doordash-tipping-policy-pay-model-controversy-changes/#535c35135220 https://www.forbes.com/sites/bizcarson/2019/06/27/doordash-t...

rockinghigh 6y ago

Only DoorDash and Instacart did this. UberEats never did. > As DoorDash grew to become the biggest on-demand food delivery app in the country, it began doing something unconventional with customers’ tips: It used them mostly to subsidize its payments to delivery workers. https://www.nytimes.com/2019/07/24/nyregion/doordash-tip-policy.html https://www.nytimes.com/2019/07/24/nyregion/doordash-tip-pol...