Risk & Compliance

DoorDash Sued Over Tipping Practices

The company allegedly took millions of dollars in customer tips meant for delivery people and used them to cover base pay.
Lauren MuskettNovember 20, 2019
DoorDash Sued Over Tipping Practices

The Attorney General for the District of Columbia filed a lawsuit against food delivery service DoorDash saying the company was “deceptive” when it took customer tips meant for delivery people and used them to cover base pay.

“This practice was deceptive, as any reasonable consumer would have expected that the amount they chose to tip would increase a worker’s pay and be provided to workers on top of DoorDash’s promised payment,” the complaint alleges.

The complaint says the practices were in place from July 2017 until at least September 2019, and that customers in D.C. paid, “millions of dollars in tips that were used to subsidize DoorDash’s payments to Dashers.” The suit was filed in the Superior Court for D.C., civil division, and seeks civil penalties and the recovery of money.

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Last March, the D.C. Attorney General Karl Racine launched an investigation into the company. Over the summer, DoorDash said it was changing its compensation policies and announced an analysis of the new pay practices last week.

“We have been testing the new model this month and refining the details based on feedback we’ve received from Dashers. We’ll continue to make improvements as we roll it out to all Dashers next month,” chief executive officer Tony Xu wrote in a blog post in August.

“We strongly disagree with and are disappointed by the action taken today,” a spokesperson for DoorDash said in a statement. “Transparency is of paramount importance, which is why we publicly disclosed how our previous pay model worked in communications specifically created for Dashers, consumers, and the general public starting in 2017,” it said. The company also said it was working with a third party to verify that tips were always paid to delivery people.

Working Washington, a workers’ rights group, said the analysis from DoorDash was not transparent. It said workers earned about $7.17 per hour after expenses, up from $6.29 per hour under the old policy.