DoorDash is facing a new lawsuit over tipping practices. This time it comes from Washington, D.C. Attorney General Karl Racine. In the suit, Racine accuses DoorDash of engaging in misleading typing practices, while failing to provide any relief to workers as the tips were taken.
Racine's office first opened an investigation into DoorDash's practice in March 2019. In DC, the suit states DoorDash customers paid millions of dollars in tips the company used to offset the cost of workers' pay over two years. Racine's office is seeking to make DoorDash pay damages and restitution.
"We strongly disagree and are disappointed with the action today," a DoorDash spokesman told TechCrunch in an email. "Transparency is paramount, and that's why we publicly announced how our previous pay model worked in communications specifically created for Dashers, consumers and the general public from 201[ads1]7. We've also partnered with an independent third party to confirm that we have always paid 100% of the tips to Dashers. We believe the claims in the complaint are unprecedented and look forward to answering them through the legal process. "
The suit focuses on how DoorDash had offset the amount it pays its delivery drivers with customer tips. Payment structure is as follows: $ 1 plus customer tips plus pay increase, 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, that DoorDash told Fast Company about 15 percent of time, that DoorDash is on the hook to pay the full amount guaranteed.
In July, Door announced Dash that it would change its tipping model, about a month after it doubled on the same model. In August, DoorDash revealed how the new model would work, but it later made it clear that it would not repay any workers for lost wages.
"There is no" refund "in the case here because every cent of every tip on DoorDash has always gone and will always go to Dashers," a DoorDash spokesman previously told TechCrunch via email in response to a question about DoorDash would pay back the delivery workers or not.
When Instacart changed tipping practices earlier this year, buyers retroactively compensated when tips were included in payment minimums. However, DoorDash does not see the need for a refund. DoorDash fully implemented its new policy in September.
Meanwhile, DoorDash is funding a voting initiative with Uber and Lyft to try to ensure it doesn't have to treat its workers like W-2 employees.
The ballot paper seems to implement an income guarantee of at least 120% of the minimum wage while on the job, 30 cents per kilometer for expenses, health benefits, occupational accident insurance for occupational injury, protection against discrimination and sexual harassment and car accident and liability insurance.
This initiative is a direct response to the legalization of AB-5, the gambling bill that will make it harder for those like Uber, Lyft, DoorDash and other gig finance companies to classify their workers as 1099 independent contractors.
I have reached out to DoorDash and will update this story if I hear back.