DoorDash faces a new lawsuit regarding its tipping practices. This time it comes from Washington, DC, Attorney General Karl Racine. In the lawsuit, Racine accuses DoorDash of engaging in fraudulent tipping practices and fails to provide relief to workers whose tips have been given.
Racine's Office first launched an investigation into DoorDash's practices in March 2019. Customers paid millions of dollars in gratuities, which the company used to offset the cost of its payments to employees over a two-year period. Racine's office strives to pay DoorDash compensation and reimbursement.
"We disapprove of the measures taken today and are disappointed," a DoorDash spokesperson told TechCrunch in an email. "Transparency is of the utmost importance. For this reason, we have publicly announced how our previous compensation model has worked in communication, which was developed in 201
The lawsuit focuses on how DoorDash netted the amount it pays to its carriers with customer tips. DoorDash's payment structure is as follows: $ 1 plus customer tip plus salary increase, which varies depending on order complexity, distance to restaurants, and other factors. Only if a customer does not tip at all, as DoorDash Fast Company announces in about 15 percent of the cases, is DoorDash willing to pay the entire guaranteed amount.
In July, DoorDash announced to change the amount tip model, about a month after it has doubled to the same model. In August, DoorDash announced how its new model would work, but later made it clear that it would not repay workers for lost wages.
"This is not a refund, since every penny of every tip on DoorDash has always been gone and will always go to Dasher," a DoorDash spokesman told TechCrunch earlier by email when he asked if DoorDash had his Repay or not.
When Instacart changed its tipping practices earlier this year, this was the case of subsequently remunerated buyers if gratuities were included in the minimum payment amounts. DoorDash, however, sees no need for back payments. DoorDash fully implemented its new policy in September.
In the meantime, DoorDash has partnered with Uber and Lyft to fund an election initiative to ensure its employees do not need to be treated as W-2 employees.
The electoral measure envisages an income guarantee of at least 120% of the minimum wage at work, 30 cents per mile for expenses, a health grant, work injury insurance for injuries at work, protection against discrimination and sexual harassment, and a car accident and employment accident grant liability insurance.
This initiative is a direct response to the legalization of AB-5, the gig worker bill, which makes it difficult for companies such as Uber, Lyft, DoorDash and other gig-economy companies to rank their workers as contractors.
I contacted DoorDash and will update this story if I hear something.