On September 25, Jennifer Peter and Karson Theiss filed a class action complaint (Peter et al v. DoorDash Inc. 3:19-cv-06098) against DoorDash Inc., at the United States District Court, Northern District of California. DoorDash is a popular food delivery service, where customers place their orders online and can tip via its website or app. Peter and Theiss are DoorDash customers, who felt deceived by DoorDash’s tipping policy.
According to the complaint, the tips placed by users, which were presumably going to the driver, were instead flowing to DoorDash by subsidizing DoorDash’s guaranteed driver minimum payment. As a result, the driver did not directly benefit from these tips; the complaint alleges that this is a misleading policy. The complaint states that the policy “violate[s] the California Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code, §§ 17200, et seq., the Missouri Merchandising Practices Act (“MMPA”), §§ 407.010 et seq., by means of unfair practices and deception, the Illinois Consumer Fraud Act (“ICFA”), 815 ILCS 505/1 et seq., by means of unfair practices and deception, and constitute unjust enrichment under Missouri and Illinois law.”
A customer’s tip would be used to subsidize the driver’s guaranteed minimum. The complaint explains, “For example, if a guaranteed minimum payment to a Dasher for a delivery is $7.00 and the consumer leaves no tip, DoorDash pays the Dasher this $7.00. But if the consumer leaves a $3.00 tip, DoorDash uses this $3.00 toward the guaranteed $7.00 minimum payment and only pays $4.00 of its own money.” Therefore, drivers are not receiving an additional financial benefit from a tip as one would expect when tipping.
In February, DoorDash received criticism for its policy and in August the company revealed more about the policy changes it was taking in light of said criticism and feedback.
This tipping policy is equivalent to tipped wages, in which tips are used to make up pay. This issue goes beyond tipping, it raises the issue of labor exploitation and questions over fair labor, how delivery workers are paid and if they are treated as fulltime employees or independent contractors.
DoorDash does not plan on back paying drivers, unlike Instacart who did backpay when it changed its tipping model.
The complaint also illustrates the difficulty in finding information regarding tipping policy. The complaint alleges that this goes against ethical business practices recognized by the Direct Marketing Association (DMA).
DoorDash is facing an array of litigation in recent months. There have been 44 cases involving DoorDash since 2019, seven cases involving Fair Labor Standards Act. Most recent cases involve the misclassification of workers as independent contractors and the failure to pay them accordingly. Others include a data breach of customer and worker personal information and other cases on the misleading tipping policy.
