If you’ve ever tipped your Doordash or Instacart driver with a card instead of cash, there’s a chance either company took a piece of that money from their driver.
While the gig economy is most often associated with transportation services like Uber and Lyft, the apps Doordash and Instacart have become gig economy staples as well, with millions of people across America using them to have food and groceries delivered to their homes. But according to a recent NBC report, the drivers who actually deliver for Doordash and Instacart are having some of their tips taken by their employers.
Instacart’s “batch payment” system, which was recently rolled out near the end of last year, guarantees drivers a minimum pay of $10 per job for delivering groceries. The pay will vary based on the items drivers must pick from the shelves and carry to their cars. Drivers are also paid based on the mileage accrued and on whether or not they’re delivering during “peak hours.”
If any job pays less than $10, Instacart supplements the driver’s pay to hit $10, and will sometimes use tips paid to drivers in order to hit the $10 threshold. Tips will only be put toward the driver’s personal take-home pay when the job hits that $10 threshold.
Doordash has a similar pay structure. According to one Reddit user who drives for Doordash, the company guarantees contractors a minimum amount of money per job, but uses tips paid to drivers as a replacement for wages they would have otherwise been paid. The poster advised Doordash customers to tip their drivers in cash if they actually intend for the driver to have that money for themselves.
“DoorDash offers a guarantee at the start for the delivery, say $5 for example. What that means is they guarantee you will get $5 minimum, tip or not. But the shady part is that your tip is counted towards that $5,” Reddit user OutOfCuteNames wrote. “So if you tip $6 in the app for example, DoorDash will pay their promised minimum of $1 (yes, 1 sad dollar) and your $6 tip will go towards the remainder of the $5 guarantee + whatever is left over.”
“So in other words…in this scenario, DoorDash will pay $1 + your $6 tip = $7 total. If you were to tip i[n] cash, DoorDash would have to pay that $5 guarantee themselves and the driver would keep the $6 tip = $11 total.”
Workers’ rights group Working Washington reports that some of their members have said these pay structures have resulted in their earnings decreasing by anywhere from 30 to 40 percent. And a class-action lawsuit filed in California last week accuses Instacart of being deceptive in its insistence that 100 percent of tips went to drivers.
“Based on this representation, Instacart knew customers would believe their tips were being given to shoppers in addition to wages, not to supplement wages entirely,” the complaint reads.
However, in the case of Doordash, the company defended the pay model as something that benefited both the company and its drivers.
“Since implementing this pay model more than a year ago, we’ve seen a significant increase in Dasher retention, percentage of on-time orders, and Dasher satisfaction,” Doordash spokeswoman Becky Sosnov told NBC.
This payment system is not unlike what other tipped workers across America have to contend with. Since the 1990s, the minimum wage for tipped workers was uncoupled from the federal minimum wage, so while there have been periodic increases in the federal minimum wage, tipped workers’ minimum wage hasn’t been increased from $2.13/hour for more than two decades.
The Economic Policy Institute (EPI) argued that this system of paying tipped workers a paltry wage and making workers depend on customers’ tips to be paid what would amount to the typical state minimum wage essentially means that customers are subsidizing businesses’ exploitation of labor.
“Customers’ tips pay the $5.12 difference between the federal tipped minimum wage and the federal regular minimum wage,” the EPI wrote in 2014. “Thus, customers provide a subsidy to employers of tipped workers worth more than twice the wage these employers are required to pay their tipped staff.”
A provision in a bill by Senator Bernie Sanders (I-Vermont) to raise the minimum wage to $15/hour would gradually phase out the lower minimum wage for tipped workers. That bill has been co-sponsored by 29 other Senate Democrats. However, Senate Majority Leader Mitch McConnell (R-Kentucky) is not likely to bring the bill up for a vote.
Carl Gibson is a politics contributor for Grit Post. His work has previously been published in The Guardian, The Washington Post, The Houston Chronicle, Al-Jazeera America, and NPR, among others. Follow him on Twitter @crgibs or send him an email at carl at gritpost dot com.