Delivery app DoorDash came under fire for its policy on paying tips to the bike riders and car drivers who bring food to hungry urbanites across the US.
New York Times reporter Andy Newman spent several days this spring doing bike delivery for various apps, including Postmates, Uber Eats, and DoorDash. One anecdote in particular caught the attention of the internet: “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.”
The conventional view of a tip is as an additional bit of money going to a worker who has just performed a service for a customer, on top of whatever that worker is paid by their employer. But as Newman’s experience shows, DoorDash’s payment system for workers using its app works somewhat differently.
According to an article on DoorDash’s website explaining the payment model, workers are paid a “guaranteed minimum” amount for a delivery, “based on a variety of factors including the size of the order, whether you have to place the order in person, and the projected driving distance, traffic, parking, and wait time at the store.”
The controversy around the payment model comes from how DoorDash applies tips to the guaranteed minimum payment. Tips are incorporated into the guaranteed minimum, rather than being added to it.
As explained in DoorDash’s article on the payment model, the company always pays a small base payment to a delivery worker. If a customer tips a worker, DoorDash adds that tip to the base payment. If the tip plus the base payment ends up lower than the guaranteed minimum, DoorDash adds extra pay to make up the difference. If the tip and base pay combined are higher than the minimum, the worker receives the full combination of both.
That leads to the situation described by Newman: A worker who gets a tip smaller than their guaranteed minimum payment will likely not see any additional pay — they will get the same guaranteed minimum payment, regardless of whether or not the customer tips.
Here’s a chart illustrating how that breakdown works, with an example from DoorDash’s explainer article:
Newman’s account triggered a firestorm on social media, with several customers expressing outrage that delivery workers weren’t receiving tips as expected.
DoorDash defends the model as being more transparent and fair for workers. In a statement to Business Insider, a spokesperson for the company said:
“We guarantee Dashers will earn a minimum amount, including tips, for completing each delivery. This ‘guaranteed minimum’ — which Dashers see before accepting any delivery — is based on the estimated time and effort required to complete that delivery. Dashers tell us they value knowing the minimum they’ll earn upfront, and our model is designed to make the guaranteed minimum fair for every delivery — including the vast majority of orders where DoorDash provides a pay boost to ensure the Dasher receives at least the guaranteed amount.”
Several commentators, including Quartz reporter Alison Griswold and The Verge reporter James Vincent, pointed out that DoorDash’s payment system is somewhat similar to the tipped minimum wage paid to many workers in the restaurant and hospitality industries.
Under federal law and in most states, such workers are paid a minimum wage from their employers far below the statutory minimum, with customer tips making up the remainder of their pay. Employers are then only responsible for additional pay if that tipped minimum wage plus tips fail to add up to the actual minimum wage. The tipped minimum wage, and tipping in general, have also come under heavy criticism.