An anonymous reader quotes a report from Gizmodo: DoorDash’s years-long scheme to use customer tips to subsidize its workers’ wages is finally catching up to the company. And hot on the heels of renewed outrage about its tip-shaving scheme, a new class-action lawsuit is taking aim at the company for misleading its customers about how their tips were used. The suit, filed this week in the U.S. District Court for the Eastern District of New York on behalf of Brooklyn resident Alan Arkin and “others similarly situated,” claims that that DoorDash failed to make clear to its customers that tips they gave through its app to couriers were not being allocated as they were intended to be, and that had customers known this, they would not have tipped through the app.
The suit defines a member of the class as someone who has “used DoorDash and paid a tip through the Door Dash app within the statutory period.” “DoorDash has engaged in unlawful and deceptive acts, practices and misconduct by misleading Plaintiff and the consuming public to believe that the tip amount entered on the DoorDash app would be received as a tip by the DoorDash delivery workers for their service,” the filing states. “DoorDash knew, and failed to disclose, that the tip amount entered by Plaintiff and other consumers on the app was received by DoorDash, in whole or in part, and used to subsidize its cost of doing business.” Gizmodo explains the tipping policy that got DoorDash in hot water: “Through a system introduced in 2017, DoorDash can pay as little as $1 per delivery to a worker depending on the amount that a customer tips on the order. This system promises a guaranteed earning, for example, $8, that the dasher will make on a delivery. If a customer does not tip, DoorDash will pay out $1 plus the remaining $7 it takes to make up that promised wage. However, if a customer does tip, their money will be used to subsidize the worker’s guaranteed pay. In other words, customers are essentially paying DoorDash — not the delivery worker — with their tip.”
DoorDash CEO Tony Xu said last week that the company would change its policy, but didn’t get into specifics.