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.
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.
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.
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?
> When the practice was brought to the United States in the 19th century, the American public was deeply uncomfortable with it. Many saw tipping as undemocratic and therefore un-American. A powerful anti-tipping movement erupted, fueled by the argument that employers, not customers, should be paying workers. But American restaurants and railway companies fought particularly hard to keep tipping, because it meant they didn’t have to pay recently freed black slaves who were now employed by those industries.[1] (emphasis mine)
> Europe eventually did away with tipping. But in America, pressure from powerful corporate interests resulted in a two-tiered wage system for tipped and non-tipped workers, institutionalizing a highly racialized system of economic exclusion. Formalized in 1938 in the first minimum wage law as part of the New Deal, this separate and unequal system stated that employers were not obligated to pay a base wage to workers whose minimum wage was met through tips.[1] (emphasis mine)
Tipping, and the laws surrounding it, are based on forcing minorities to work for substandard wages and opening them up to exploitation and harassment with no accountability for their employers. Appealing to the laws is appealing to inherently racist rationalizations of what fair wages are and should be.
People know how tips work. How tips work is the problem that needs to be solved. History and context matters, in this case and many more.
> Appealing to the laws is appealing to inherently racist rationalizations of what fair wages are and should be.
This argument is hard to take seriously.
Do you really think that eliminating tipping would do away with racial wage disparities and sexual harassment? If only our problems were that easy to solve.
> 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.
> Most DoorDash drivers didn't realize that they were being gypped.
First, I'm only really bringing this up because I used that same term for much of my early life without knowing it's origins, so I think it's worth discussing because of the way it's unconsciously used by many, and not as an attempt to chastise. The term "gypped" has some connotations once you know where it's from that make it hard to ignore and it ends up distracting from the point. After the origins become clear, it's sort of like hearing "jewed" as a verb. Gypped may be somewhat common, and may be used without ill-intent and unknowingly the vast majority of times, but it's also one of those words that's better dying off.
> 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:
> customers of DoorDash almost always tip ahead of time
A tip before you receive a service is indistinguishable from a bribe used to prioritize your service.
I don't understand why this is the norm, and why so many people play along. It would be so much more sensible to tap the user on the shoulder after the delivery to ask them for their tip.
Why is this matter though? at the end of the day, what matter is my final net pay. It doesn't matter if the company take all my tip or deduct something, or some other complicated calculation, all i care is the final amount. If I consider that amount too low for the work I did then I don't do it.
Why wouldn't you want to make more if you could? Wouldn't you want your extra effort to pay off? I get your point, but it's not like the net pay of delivery drivers is particularly good. Most of them multi-app between DoorDash, GrubHub, Postmates and Uber Eats in order to make any meaningful amount of money.
Yes of course I would always want to make more. For example: The company can say my pay is $100 but then after some complex calculation, I get $50. I don't care how they calculate it, all I know is from my perspective my pay is actually $50 (not $100) and I would then use this $50 number to compare with my total effort (normal effort + extra effort).
>but it's not like the net pay of delivery drivers is particularly good
Then I simply won't do it. This has nothing to do with the pay model
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.
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.
The fact that "base pay" is lower than minimum wage is already setting up an exploitative situation. The laws were made by lobbyists who wanted to make sure the newly freed slaves they employed weren't on the payroll from the employer.
"Wrongness" and "illegality" are not the same thing.
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.
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.