While Grubhub made a lot of headlines this week as the poster child for controversial restaurant fees, DoorDash was all over the news for its controversial stance on how it pays its drivers.
Once considered the underdog of third-party delivery, DoorDash has spent the last year or so doubling down on its expansion efforts. The service became the first of the top four (which includes Grubhub, Uber Eats, and Postmates) to be available in all 50 U.S. states, and it’s seemingly made its way into every nook and cranny of suburban America through high-profile partnerships with major chain restaurants like The Cheesecake Factory, Chipotle, and the ubiquitous Chili’s. It’s also raised lots and lots (and lots) of funding.
So far those expansion efforts are paying off. In the last week, news surfaced that DoorDash now holds the number one spot in terms of marketshare for third-party food delivery services, unseating longtime leader Grubhub. Currently, DoorDash is valued at $12.6 billion, which is almost double the $6.5 billion market cap of the publicly traded Grubhub.
The growth isn’t without controversy, however, because in addition doubling down on its expansion plans, DoorDash has also, it seems, continued its controversial pay structure for drivers that many feel is unethical. TechCrunch reminded us of that point yesterday when it called out a blog post by DoorDash CEO Tony Xu that was meant highlight DoorDash’s commitment to “transparency” but really just wound up highlighting the fact that despite its $12 billion-plus valuation, the company seems to be barely paying its drivers.
“With our current pay model, Dashers see a guaranteed minimum — including tips — prior to accepting a delivery,” Xu wrote in the post.
For every delivery the DoorDash driver (also called a “Dasher”) takes, they are guaranteed a minimum pay amount. (Dashers see this number before they ever accept or decline a job.) Unlike a serving job in a brick-and-mortar restaurant, that guaranteed minimum pay isn’t derived from any kind of hourly wage. Rather, DoorDash pays a $1 base fee then uses the tip from that order to count towards that minimum guarantee. If tips plus that $1 aren’t enough, DoorDash makes up for the rest:
Where this becomes really problematic is when drivers (which the company calls Dashers) get an especially large tip that winds up not being a tip, but instead subsidizing the minimum guarantee:
It’s the same pay structure that made waves a few months ago for services like Instacart and Amazon Flex. Instacart wound up changing its structure and apologizing to workers. Amazon stood firmly by its policy, and it seems DoorDash has as well. If Xu’s blog post is anything to go by, it seems that rather than backpedal on its controversial model, DoorDash is just taking further steps to make sure the pay structure breakdown is 100 percent apparent — to Dashers, at least. One small step for transparency, one giant leap backwards for the ethics of the gig economy. Or as labor rights group Working Washington said in a statement to TC, “Talking about transparency is good. And admitting you pay $1/job is better than denying it. But $1 is still $1.”
So what do we do about it?
The easiest solution would be for more customers to just skip the “tip” option in the DoorDash interface and tip in cash. That’s unlikely, given how integrated digital tipping is in both our apps and our lives at this point. Plus, consumers shouldn’t have to go searching through FAQ pages to find out exactly where their tip money goes during a transaction. If DoorDash really wants to tout transparency as one of its priorities and values, it should be making clearer to its customers, within the digital transaction process, where their money goes. Leading someone to believe they’re paying a gratuity when they’re really just subsidizing a base pay is just flat-out deceptive, and it’s the sort of thing that could erode customer trust over time.
Including customer relationships in those transparency goals should definitely be a priority for DoorDash. But at the end of the day, giving Dashers a fair wage rests on the shoulders of the company itself, not its paying customers. Some, like Working Washington’s Pay Up Campaign, want a minimum pay wage for workers of $15/hour plus expenses. That’s a larger conversation that’s making its way around many parts of the gig economy right now, and it’s one we’ll likely hear more debate around in the coming months.
Even if DoorDash doesn’t adopt that policy, you’d think a company valued at over $12 billion could find some kind of middle ground between $15 minimum wage and $1 to pay its workers, and to do that without roping unknowing customers into the process. Perhaps amid plans to tackle the whole of suburbia, DoorDash should tackle how to treat the people building that empire more fairly.
Hard to understand the gripe. Don’t like the pay? Do no take the job.