DoorDash subsidizes driver wages with tips

It’s true that DoorDash offsets the amount it pays its drivers with customer tip, according to an FAQ page on its own site.

“For each delivery, you will always receive at least $1 from DoorDash plus 100% of the customer tip,” DoorDash states on a Dasher FAQ page. “Where that sum is less than the guaranteed amount, DoorDash will provide a pay boost to make sure you receive the guaranteed amount. Where that sum is more than the guaranteed amount, you pocket the extra amount.”

To be clear, drivers see the guaranteed amount in the app before deciding to accept or reject the order. That amount is based on the size of the order, whether or not you have to place the order in person, distance away, traffic and other factors.

On another page, DoorDash describes its payment structure as follows: $1 plus customer tip plus pay boost, which varies based on the complexity of order, distance to restaurants and other factors. It’s only when a customer doesn’t tip at all, which DoorDash told Fast Company happens about 15 percent of the time, that DoorDash is on the hook to pay the entire guaranteed amount.

But just because DoorDash is upfront about it, it doesn’t mean drivers are happy about it. There’s a webpage, Reddit and Subreddits that all describe DoorDash’s practices.

On the website, No Tip Doordash, it states:

While the tip may technically be going to the driver, it is only replacing the normal delivery pay. Your tip saves doordash money, and it is not increasing the drivers pay. Please tip in cash, if available.

In a statement to Bloomberg, DoorDash said it implemented this policy to “ensure that Dashers are more fairly compensated for every delivery.”

This comes shortly after Instacart apologized and announced it would stop engaging in that practice. In a blog post last week, Instacart CEO Apoorva Mehta said all shoppers will now have a guaranteed higher base compensation, paid by Instacart. Depending on the region, Instacart says it will pay shoppers between $7 to $10 at a minimum for full-service orders (shopping, picking and delivering) and $5 at a minimum for delivery-only tasks. The company will also stop including tips in its base pay for shoppers.

Amazon also reportedly engages in this practice, according to The Los Angeles Times.

I’ve reached out to DoorDash and will update this story if I hear back.

DoorDash is reportedly raising $500M at a $6B+ valuation

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