In July, New York Times reporter Andy Newman reported on his springtime experiment in attempting to earn something close to a living wage by juggling food deliveries for several online companies while dodging New York City traffic on his bicycle. Newman’s report shined a light on many alarming aspects of the delivery gig economy, including serious on-the-job injuries and traffic-related deaths, but one detail has caused an uproar that continues today in multiple lawsuits and proposed legislation: Newman’s disclosure that one of the apps he worked for, DoorDash, used part or even all of customers’ tips to subsidize the company’s base payments to workers.
As the controversy over DoorDash’s policy of diverting customers’ tips began to make its way across the internet, news broke that other companies, including Instacart and Amazon, were engaging in similar practices.
Perhaps unsurprisingly during this, the era of late-stage capitalism, the majority of the outcry hasn’t been focused on the way that the companies were stealing from their contract workers. Instead, the lawsuits and legislation alike have been aimed at protecting consumers. In other words, those customers that do tip expect their money to go to the delivery person, not to subsidize the million- or billion-dollar businesses that hire them.
DoorDash customers on both coasts, in New York and California, have filed suit, claiming that DoorDash’s tip diversion policy is a deceptive business practice. Earlier this week, Washington, D.C., Attorney General Karl Racine also filed suit, saying in the complaint that “customers using the app had the reasonable expectation that the tips they left would go directly to their delivery drivers.” Racine’s suit seeks to force DoorDash to surrender the tips the company kept and to pay penalties for violating the District’s consumer protection laws.
Proposed legislation in both Michigan and New York City also takes the consumer-protection route. In each case, the bills would require online delivery companies to tell customers at the point of sale whether their delivery driver will actually receive the customers’ tips.
According to Michigan state Sen. Mallory McMorrow, the point of her bill is to give customers information up front so they can decide whether to tip through a company’s app or give drivers cash at the door. McMorrow said she originally came up with the bill after hearing from constituents who were upset to learn that their tips were being used to subsidize delivery companies’ bottom lines.
The problem doesn’t stop with online delivery apps. In fact, McMorrow said, other companies are jumping on the tip-stealing bandwagon. “We've gotten a constituent complaint just over the past few weeks that a car wash is using the same practice” by using tips placed in a cash box to subsidize employees’ wages rather than providing the money directly to the workers. If the car wash cited by McMorrow has classified its workers as employees, the workers may have recourse under federal law to get their tips back. But if the car wash claims the workers are instead independent contractors—a potential misclassification afflicting many gig economy workers, including delivery drivers—those tips are fair game.
In New York City, City Council member Ritchie Torres plans to propose legislation similar to McMorrow’s bill. In a Nov. 19 email, a spokesperson for Torres explained that he plans to introduce the bill to protect customers of new delivery companies that may come along and try to follow in DoorDash’s former tip-swiping footsteps. DoorDash, Instacart, and Amazon have all announced that they will no longer keep tips that are meant for their drivers.
Instacart retroactively compensated its workers, called “shoppers,” when the company stopped taking their tips earlier this year. DoorDash has refused to do so. No information was readily available as to whether or not Amazon plans to turn over past tips to its drivers. However, in August the company did pledge to finally start explaining to drivers what and how they’re being paid.
“New food apps may be developed that use the model of taking tips to contribute to employees’ base pay,” Torres’ spokesperson Raymond Rodriguez explained. “It is better for consumers to still be notified of how tips are being used, even if the tips are not being used to supplement base pay.”
Rodriguez told Daily Kos that Torres is confident his fellow City Council members will be receptive to his soon-to-be-proposed legislation. In Michigan, on the other hand, McMorrow reported that the state’s Republican leadership referred her bill to the Committee on Government Operations, “which is affectionately known as ‘where bills go to die.’” McMorrow said the move was disappointing, particularly since she took the time when introducing it to go “desk to desk on the Senate floor” to explain the bill and to get Republicans as well as Democrats onboard as sponsors.
The state senator added that she hopes to get another chance to explain that her bill “isn't mandating that companies change their policy necessarily, but it really is just to empower consumers,” in hopes of giving it a second chance to at least get a hearing.
While some are approaching the issue of tip diversion from a consumer-protection standpoint, delivery workers themselves are fighting for recognition and fair compensation for the value they bring to an industry that’s projected to grow into a $200 billion behemoth in the next five years. Last week, the gig worker activist organization #PayUp reported that, based on a DoorDash report of driver pay, those workers are making just $7.17 an hour after expenses—less than the federal minimum wage for workers who also have to pay extra taxes because they are classified as self-employed contractors.
Instacart workers, who recently won an $11 million settlement in a California lawsuit as reimbursement for the cost of using their own vehicles, staged a three-day walkout earlier this month to pressure the company into restoring its former 10% default tip. Amazon delivery drivers in Massachusetts are suing to be recognized as employees of the company instead of classified as independent contractors, and DoorDash drivers in Georgia are suing to reclaim their lost tips.
Given the shifting legal landscape, frequently dangerous work, low wages, and extra taxes being levied on contract workers in the delivery gig economy, there is only one clear choice available to customers who wish to use delivery services while ensuring that their driver is paid fairly: tip generously, and pay that tip in cash at the door.
Dawn Wolfe is a freelance writer and journalist based in Ann Arbor, Michigan. This post was written and reported through our Daily Kos freelance program.