By Jessica Suriano
For Lucas Grassi, a 22-year-old DoorDash driver in Tucson, Arizona, tips can make or break a day of delivery service. But sometimes he has wondered if tips make a difference at all, in part because, until recently, the app’s breakdown just hasn’t been transparent enough.
Grassi has been picking up gigs on DoorDash for the past eight months and on Postmates for over one year; he delivers orders up to 20 hours per week when he’s not busy being a full-time student. But he says the payment breakdowns he sees on apps after he completes deliveries rarely make it clear if customers tipped him, how much they tipped, or even if they tipped at all.
“I don't really trust [it] at all,” Grassi told MTV News. “I feel like I could be making a lot more money than I actually am.”
He had good reason to be suspicious. Until recently, any tips customers gave to their DoorDash drivers through the app only decreased how much money DoorDash had to contribute to the guaranteed minimum pay; the drivers weren’t receiving any of that tip. The older policy also made DoorDash, which is now worth over $12 billion, an outlier: Drivers who work for Grubhub, Instacart, Postmates, and Uber Eats can expect to keep 100 percent of tips from customers. Instacart used to subsidize drivers’ pay with tips, but reversed its policy in February after enduring public scrutiny. As of publishing time, Amazon Flex and Caviar, which is owned by DoorDash, still use tips to reduce how much they have to pay workers; in Caviar’s case the only way this changes is if the driver is able to surpass the weekly guaranteed pay.
After facing widespread criticism over its policy, DoorDash announced on July 23 that it would show drivers a breakdown in the app after each order of how much money they made from working for DoorDash, plus their earnings from a customer’s tip. (The company did not return a request for comment made by MTV News.) Then, on August 22, DoorDash introduced a new plan, which promised its gig workers would pocket 100 percent of tips. The company also promised to increase its base pay, and incentivize those who wanted to work during given “Peak Pay” hours. DoorDash CEO Tony Xu claimed that gig workers would earn more money on average, and promised the company would be working with an undisclosed third party to ensure they were, well, putting money where their mouths were.
Still, the policy change was too late to dodge legal action: In February, two DoorDash drivers in Georgia, Jamie Webb and Aaron Hodge, filed a class action lawsuit against the company for “misrepresenting to drivers the true nature of their pay and the allocation of tips,” according to the legal document. The plaintiffs are demanding a jury trial and that DoorDash pay back drivers the money they would have made from 100 percent of customer tips. A second class action lawsuit was filed in July on behalf of Alan Arkin, a New York resident who’s made 38 DoorDash orders, and on behalf of any other DoorDash customer who may also feel deceived about who was benefiting from tips.
Yet it’s likely that job opportunities like those provided by DoorDash and other convenience-driven apps will only continue to grow, especially as more and more young people move toward freelancing and an increasingly precarious gig economy. In an economy of slow-moving wage growth, exorbitant costs of housing, and where the student debt crisis has reached $1.5 trillion in outstanding loans, it’s not surprising that nearly half of millennials — much more than older generations — reported working in the gig economy to earn extra money, according to a Bankrate survey. There is not a limitless supply of fairly-compensated full-time jobs, so turning to gig work feels much less like a choice than it does a necessity for many people.
“We have an affordability crisis affecting America,” Ritchie Torres, a councilmember for New York City’s 15th district, told MTV News. “There are too many Americans who cannot afford to keep pace with the cost of living with one job. You have people who are solidly-middle-class or solidly-working-class working multiple jobs in the gig economy just to keep themselves and their family afloat.”
And tips are a crucial part of that income. Shani Hogan, 23, told MTV News that she often makes more money from a tip than from an order’s guaranteed minimum pay when she makes deliveries in the Los Angeles area. As a recent graduate from Loyola Marymount University, she said she currently depends entirely on her Postmates income to afford costs of living, and her tips are usually the most important determining factor of how much that will be.
“Food delivery is just as importantly tip-based as being a waiter,” she said. “Honestly, the apps kind of pay you dirt — you do not get paid a lot for how much you're driving and how much time you're spending.”
While many apps prompt you with buttons that calculate tips at given percentage points, some people believe you should be paying more altogether. At Eater, the food writer Helen Rosner made a case that “the absolute minimum acceptable tip for any food delivery is $5” — and it should always be in cash. And thanks in part to social media, both customers who intended for their tips to go directly into drivers’ pockets and app-based delivery drivers themselves have sparked broader conversations about the kinds of treatment workers in the gig economy should expect from their employers.
“Tipped workers are among the most vulnerable people in our society,” Torres said. “Federal law treats them as indentured servants who are entitled to a sub-minimum wage of $2.13,” referring to the pay model called tipped wage, which allows an employer to count tips towards a worker’s wages. Yet while restaurant workers have minimum-wage protections that limit the amount of tips that can be used toward wages, delivery drivers do not. Similarly, New York City was the first city to pass a minimum wage rate for drivers of the ride-hailing companies Uber, Lyft, Via, and Juno, but currently there is not a similar protection for on-demand delivery drivers. Therein lies the point of exploitation.
Torres is hoping to change things with new legislation: A bill that would require an app-based delivery service to disclose whether 100 percent of tips are actually given to workers, or are incrementally increasing the company’s profit. It’s currently in the drafting stages, and he hopes to introduce it by the end of the summer.
He’s not alone in his calls to action to support gig economy workers, either: Brad Lander, a councilmember for New York City’s 39th district, wants to introduce a bill that would create a living-wage requirement for delivery workers and all other independent contractors. Of course, freelance work looks differently depending on the job sector, which adds another layer of complications to drafting the bill. Still, he views the fight as one worth navigating.
“The fact that these gig companies have come up with a new business model which is good for their bottom line and convenient for customers — but impoverishing for workers — is unacceptable,” he told MTV News.
The dispute over earned tips is just one of the myriad of problems facing the industry. Most app-based delivery drivers — along with 41.5 percent of the American workforce — are considered non-employee workers, meaning they don’t receive benefits such as health insurance or workers’ compensation if they’re injured or become sick on the job, and are not protected by federal anti-discrimination laws.
In California, Assemblywoman Lorena Gonzalez wrote a bill that would reclassify gig economy workers as employees and guarantee them more protections. Uber and Lyft oppose the bill, known as Assembly Bill 5, but have proposed introducing some benefits or protections for their drivers without reclassifying them as employees. In July, the Senate Committee on Standing Committee on Labor, Public Employment and Retirement, passed the bill with a 4-to-1 vote. Now the measure will move to the state’s Senate Appropriations Committee, and has even received support from Presidential candidate Kamala Harris.
“I guarantee you, if the new normal is ‘if I hire you over an app, you have no rights,’ every one of our jobs are at stake, even mine, because we will all become demand workers,” Gonzalez said at a rally for the bill. “On demand is not how we create a middle class, it’s not how we preserve our middle class jobs, and we cannot sell out to an idea that just because they hire you by an app that you don’t have the same rights.”
Other people are trying to mobilize on a larger scale with boycotts: Earlier this year, software engineer and tech sector activist Anna Geiduschek, 27, penned an open letter on Medium to DoorDash denouncing its tipping policy. The letter states that the current and future tech workers who sign it are vowing never to work for DoorDash until they fix their pay policies. So far, hundreds of tech workers and delivery drivers have signed it in support.
“I worked at Dropbox for a number of years and saw firsthand how hard it is to recruit engineering candidates in the Valley — how important it is that these companies have a good pipeline of recruits,” Geiduschek told MTV News. “And so, to kind of jeopardize that seemed like the most powerful thing that I could do.”
Among her letter’s demands is a call to meet a pay floor of $15, which matches the minimum wage suggested by the House-approved Raise the Wage Act. The pathway to an increased federal minimum wage has become a talking point among presidential candidates so far, and the Raise the Wage Act is an integral piece of that conversation. The Act not only promises to increase the federal minimum wage to $15 per hour by 2025, but would also phase out the subminimum wage for tipped workers.
According to Geiduschek, structural change is the most common-sense solution. “It's much easier to force [companies] to do the right thing through policy that would treat these workers like employees, and give them benefits, and require that they pay minimum wage after expenses, and all of the things that we expect that you should be able to have out of any job,” she said.
And for drivers, legislative efforts could change their quality of life for the better. Take Hogan, who says she is constantly running out of money to afford the gas for her car to deliver orders.
“[Making more money] would probably change my life substantially,” she said. “When this job becomes your main job, it’s really hard.”