When the pressure is on, business types get ‘creative’. As in ‘creative accounting’. That’s just another name for cheating. This time, amid the ongoing survivability crisis in the delivery sector, Door Dash gets the ‘creativity’ award…
Official Door dash promo photo from happier times… Before the industry
hit a wall, with services saturating virtually all urban markets.
… Which is to say, the company has been ordered to pay it’s Dashers (front-line delivery staff) $16.75 million. The court-ordered settlement came after an independent investigation found that the com-pany was misleading Dashers and customers about what was going on with their tips.
Convoluted math
It appears Door Dash was performing some sneaky sleight-of-hand with the tip money it was col-lecting on orders paid-for digitally. How sneaky? I’m still not sure I understand how the scheme worked…
Flashback to the ‘teens…
New York City was the first US metropolis to offer app-based food delivery drivers a minimum wage. A precedent that followed years of complaints from worker that they were being underpaid. Shortly before NYC mandated the minimum wage, DoorDash announced a new hourly pay system dubbed ‘Earn By Time’. The plan was supposed to, “let couriers earn a guaranteed hourly rate including tips.”
The previous Dasher compensation plan involved a complex equation which included variables such as the time it took to deliver, distance traveled, and ‘rating’ – whatever that meant. The new plan, which sounded simpler and better, turned out to be a grand deception.
Fast forward to today…
In a terse news release last week, New York State Attorney General Letitia James announced: “For years, @DoorDash cheated its delivery workers by using customers’ tips to meet its workers’ guar-anteed pay instead of giving them the [full] tips they earned.”
She included an example demonstrating how the company would use its own ‘proprietary’ math to calculate how much of a tip would get passed on to a deliverer, based on a guaranteed payment to the deliverer of $10:
- If a customer tipped $0, DoorDash would pay $10 ($1 + $9 remainder). The Dasher received $10.
- If a customer tipped $3, DoorDash would pay $7 ($1 + $6 remainder). The Dasher still only received $10.
- If a customer tipped $6, DoorDash would pay $4 ($1 + $3 remainder). The Dasher still only received $10.
- If a customer tipped $9, DoorDash would pay $1 ($1 + $0 remainder). The Dasher still only received $10.
See? I still don’t totally get the logic, actually. But anyway…
Misled everyone
“Delivery workers are integral to our communities, working tirelessly to bring food and other essen-tials directly to our doorsteps in all conditions,” James stated in a press release.
“DoorDash misled customers who generously tipped and deceived Dashers who deserved to be paid in full. This set-tlement returns millions to the pockets of hardworking Dashers and ensures trans-parency in DoorDash’s payment practices going forward.”
My take
Do you recall, back in March of last year, when some Door Dashers, desperate for tips, started holding food orders hostage? They messaged customers, suggesting delivery would be delayed if they didn’t agree in advance to proffer an ‘appropriate’ tip.
Remember last spring, when the State of Florida enacted wide-ranging legislation regulating food delivery services, in response to consumer and restaurant complaints? The new measure was in-tended to ensure transparency between the services and their customers.
And again, last August, when unregulated ‘hidden fees’ were enraging delivery service customers pretty much everywhere?
The $16.75 M court order against Door Dash suggests the delivery service sector is still, essentially, a Wild West frontier, business-wise – full of latter-day snake oil salesmen, cattle rustlers and horse thieves…
~ Maggie J.