DoorDash has categorically denied the allegations, yet changed its policies in September 2019 to ensure that its workers receive the gratuity consumers thought they were paying.
Food delivery application DoorDash will pay $2.5 million to settle claims that it stole workers’ tips in Washington, D.C.
According to The Washington Post, the lawsuit against DoorDash was filed in November 2019. Lodged by D.C. Attorney General Karl Racine, the complaint alleges that DoorDash employed a misleading in-app interference between 2017 and 2019.
That interference, says the Post, suggested that customers who wished to add a “tip” would be supplementing their delivery driver’s gross earnings.
In reality, though, DoorDash’s optional “tips” were pocketed by the company; gratuity payments were, at best, used to supplement the flat $7-per-delivery rate DoorDash pays its drivers.
“Any reasonable consumer would have expected that the ‘tip’ they added to the delivery charge through the DoorDash checkout screenflow would be provided to the Dasher on top of the payment promised by DoorDash for the delivery,” the lawsuit asserted. “But during the relevant period of time, that was not the case.
“Instead,” the suit continues, “DoorDash used consumer tips to subsidize the Guaranteed Amount payment [per delivery] promised to Dashers.”
As LegalReader has reported before, DoorDash did face criticism for doing everything within its power to make its tipping and payment policies as obfuscating as possible—virtually guaranteeing that most consumers would not know where their tips were really going.
Racine’s lawsuit claims that DoorDash’s “disclosures” about its pay model were “ambiguous, confusing, and misleading,” in that they encouraged customers to tip but “did not disclose, in the vast majority of circumstances, [that tips would] make no difference at all to a Dasher’s pay and would only go toward subsidizing DoorDash’s share of Dasher pay.”
While DoorDash has long denied any wrongdoing, the company did change its policy in September 2019. The settlement, as such, only covers claims from when the more deceptive tip policy was in effect.
Of the $2.5 million total award, $1.5 million will go to jilted delivery workers and $750,000 to Washington, D.C. The remaining quarter-million will be split between two D.C.-area charities.
“Today’s settlement rights a wrong that deceived D.C. customers and deprived workers of monies that they should have been paid,” Racine said in a statement. “Gig economy companies provide important and necessary services, especially during the pandemic. However, the law applies to these companies, just as it does to their brick and mortar counterparts.”
The Washington Post notes that the settlement’s consent order allows DoorDash to makes it payments and agree to D.C.’s conditions without actually admitting wrongdoing.
Campbell Matthews, a DoorDash spokesperson, said the company is “pleased to have this issue behind us.”
“Our focus,” Matthews said, “is on continuing to support Dashers, restaurants, and customers in D.C. and around the country.”
Sources
DoorDash settles D.C. lawsuit for $2.5 million after being accused of pocketing workers’ tips
DoorDash Will Pay $2.5 Million in Tip-Skimming Settlement
DoorDash will pay $2.5 million to settle DC suit over driver tips
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