Back in March, following criticism over its wage model, DoorDash co-founder and CEO Tony Xu wrote in an internal letter that the company would be conducting surveys and roundtables with its workers about the controversial system. In an update this week, Xu said that even as the company plans to introduce greater transparency about wage breakdowns, the pay model will remain in place.
“Overall, we heard that Dashers value transparency and fair, consistent earnings. With our current pay model, Dashers see a guaranteed minimum — including tips — prior to accepting a delivery,” Xu wrote in a Thursday blog post. “The guaranteed minimum is based on the estimated time and effort required to complete the delivery. Providing this guarantee upfront means that Dashers are more likely to accept all kinds of deliveries because they know what their earnings will be even if the customer provides little or no tip.”
Among the company’s new initiatives, Xu said, are “better earnings” for deliveries of longer distances, closer deliveries to a dasher’s proximity, new “promos” and incentives, reduced wait times, and “occupational accident insurance” for some injuries suffered on the job (though it does not cover bike or car damage). But these things do not fix the most fundamental issue with DoorDash’s payment system: that it uses its workers’ tips to help cover their base pay.
Here’s how this model inherently screws DoorDash delivery workers: DoorDash promises a “guaranteed minimum” that its workers can earn per dash (company speak for a delivery). The company agrees to pay at least $1 of that amount, depending on how much a customer tips.
If, for example, a delivery worker accepts a dash with a guaranteed minimum of $9, and a customer tips $3, DoorDash will apply that tip toward the guaranteed minimum and pay the difference. In other words, DoorDash will pay $6 (or $1 plus an additional $5), the necessary amount to make up the guaranteed wage. If, however, a tip exceeds the guaranteed amount of $9, DoorDash will pay a mere $1 to the employee for that dash and tip will make up the rest.
Responding to this week’s update, Sage Wilson of labor group Working Washington said in a statement that the company “continues to stand behind an entirely opaque pay model which offers no way for workers to understand why they’re getting paid what they’re getting paid.”
“They continue to subtract tips from worker pay. And they continue to mislead customers about where their tips are going,” Wilson added. “When a customer tips more, DoorDash pays less—in other words, the customer is tipping the company.”
DoorDash did not immediately return a request for comment.
According to figures the company shared with Fast Company for a report in February, customers don’t tip in about 15 percent of cases. For roughly 45 percent of orders placed, the company told the outlet, customers tip less than half of the amount needed to make up that guaranteed wage. Xu wrote in a letter to the company’s workers in March that dashers in the U.S. earned more than $17.50 per hour on deliveries, though that’s a matter of some debate.
Even if that figure were correct, DoorDash may be omitting the various expenses that fall on the shoulders of its dashers, including gas, car maintenance, vehicle wear and tear, and other expenses. Dashers who spoke to Gizmodo for a March report claimed they were barely earning minimum wage after these expenses, and one former dasher claimed that the company didn’t count dashers as “working” unless they were on a dash. Moreover, they claimed that the company made it incredibly difficult to keep track of how much of their wages were being paid by DoorDash and how much came from tips.
In the blog post this week, Xu said this frustration was the single greatest complaint DoorDash received from dashers, based on feedback the company collected. Is it slightly better that the company will provide greater transparency about how it’s screwing over its workers? Sure. Does that make its pay model—the subject of a tech worker boycott and an investigation from San Francisco’s Office of Labor Standards Enforcement—any less exploitative? Hell no.
Lest the company think otherwise, this doesn’t appear to be lost on either dashers reacting on Reddit to Xu’s update or the company’s critics. In response to the blog post, Wilson said that “admitting you pay $1/job is better than denying it,” but added that “$1 is still $1.”
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