Doordash Finally Settles $2.5M Tipping Lawsuit and Licks Its Wounds

 1 year ago
source link: https://entrepreneurshandbook.co/doordash-finally-settles-2-5m-tipping-lawsuit-and-licks-its-wounds-63e028410e8b
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Doordash Finally Settles $2.5M Tipping Lawsuit and Licks Its Wounds

Consumers need to be aware of how their companies treat employees.

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Author via istock

When times are good, the first thing I splurge on is food. I’ll never own a $70,000 car. But I’ll gladly overpay 3x for a meal, particularly if it means I don’t have to leave the house.

Years ago, I humble-bragged on Facebook that Pizza Men love me because I’m a good tipper. This, predictably, invited a wave of gay jokes. But my original sentiment was the same: tipping is good karma.

For years, I was using Doordash, until I found out my tips weren’t being distributed properly. It was infuriating to the point that I stopped using them, but I wasn’t alone.

The expanding gig economy has brought an avalanche of workers' rights issues right to our doorsteps. And despite any wishy-washy platitudes that CEO’s tweet and twat about, workers remain in jeopardy, in new, evolving ways.

What did Doordash do ‘wrong’ exactly?

Let’s say you ordered dinner delivered from a local restaurant.

The food comes and you thank the driver. Then, because you don’t have any cash, you go into the app and tip him.

This continues for years, then you find out, through as 2017 NBC News story: your money wasn’t necessarily going to the driver.

DoorDash guarantees $7 payments to drivers. But if you tip, your money goes towards that $7 rather than going on top of the payment. For example, a $4 tip means DoorDash pays $3 and the drivers get a total of $7, rather than $7+ $4. This means that, in the vast majority of cases, your tip wouldn’t change the driver’s pay.

Drivers were miserable about this policy and their complaints went unheard until this story broke. DoorDash maintained they were honest about their pay structure with all drivers (who they still refused to acknowledge are actual employees).

In DoorDash’s eyes, they were still giving tips to their drivers. It was just considered part of their $7 guarantee (which is also supposed to cover all gas and maintenance expenses too).

The policy was deceptive to customers

Most of us have a basic understanding of tips: I’m giving you a few extra dollars on top of what they pay you.

After all, a restaurant doesn’t ‘not pay’ waitresses their $3/hour-ish check just because it was a busy night. They still want that money.

DoorDash was hit with a lawsuit by DC’s Attorney General, Karl Racine. They immediately adjusted their policy (sorta…) to pay their drivers, but the government still sought damages. DoorDash threw their arms up and claimed it was unfair and kicked and screamed for years.

Startups are remarkably derivative of their competitor's practices. Consequently, this lawsuit blew the door open on similar problems in the industry.

A driver for Instacart posted this viral screenshot in 2018:

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Author via Squarespace

Confirming the exact same practice at work.

Two years later there is resolution

Doordash finally agreed to pay $2.5 million under the condition that it admitted no wrongdoing. Of that settlement, $1.5 million goes to the drivers, $750K to the district, and $250K to two charities.

The settlement is only a drop into an ocean-sized problem.

For context, Uber spent $250 million lobbying in California alone, all to pass proposition 22 which insulates companies like Lyft and Grubhub from classifying their workers as employees.

They won despite the practical reality that UberEats, Lyft, and any gig service fails to meet the ABC test of independent contractors (you must meet all 3):

  1. The worker is “free from the control and direction of the hirer in connection with the performance of the work;”
  2. The worker performs work that’s “outside the usual course of the hiring entity’s business;” and
  3. The worker is “customarily engaged” in an independently established business “of the same nature as that involved in the work performed.”

I’d wager that a majority of gig workers don’t meet any of those criteria.

Waterfalls of lawsuits continue

Grubhub and its competitors still have all sorts of shady conditions that stop tips from going directly to the driver. Forget to tie your shoes before you leave? No tip (A joke, as of right now…).

Consumers take notice

Tip in cash if you can. Gig companies are always sniffing out drama-free ways to pay employees unfair wages.

Don’t let cheap things and convenience come at the expense of the little guy. Stay educated and aware.

Business owners — give yourself a reasonableness gut check. Nobody expects us to pay low-skill workers $75,000 a year. But there should never be a situation where we are snatching tips from people over trivialities.

If that’s what you have to do to survive, it might be time for a new business model.

Lastly — my own personal experience

Many years back, I worked at a Play-It-Again sports franchise. They paid me the bare minimum wage. I worked several night shifts each week from 4–8. Then, it took us 15–20 minutes to close down the store.

When I got my first paycheck, I noticed they’d excluded that 15–20 minutes from my paycheck. I mentioned it to the boss man and he said, “Well, I don’t pay you guys for your breaks.”

I thought, “I don’t take any breaks?” But I was too timid to press the issue for fear of losing my job. No, that little 15–20 minutes of work didn’t make or break me, but it felt dehumanizing to be expected to work for free when he was making a fortune with his store.

I kicked myself for not having the courage to fight back more. Perhaps this is why I, admittedly, get a bit triggered by stories like this.

People underestimate how much the little guys get pushed around. We need to respect workers, as employers, and as customers.

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