Apparently taking Amazon’s lead, DoorDash announced a revised pay model on Thursday that should fetch its couriers “more money on average,” according to DoorDash CEO Tony Xu—that is, compared to the previous tip-skimming operation the company has been getting chewed out over for months.
With this older model, the food delivery app used tips from customers to subsidize minimum payouts the company guaranteed for its dashers—a.k.a. DoorDash delivery workers. So, for example, if DoorDash promised to pay $8 upfront for an order and the customer receiving that order tipped $3, the dasher would still only walk away with $8. In short, DoorDash profited off tips far more than dashers did.
While DoorDash has always asserted that its dashers keep “100 percent of customer tips,” a company blog posted Thursday specifies that with this new model, “Every dollar customers tip will be an extra dollar in their Dasher’s pocket.”
Expected to roll out in September, this updated model outlines that a dasher’s total earnings from a delivery comprise a company-guaranteed minimum base pay, any potential promotional earnings, and customer tips.
According to the blog post, DoorDash said it’ll determine the base pay for each delivery by “estimated duration, distance, and desirability.” Base payments start as low as $2 and can range to more than $10. Gizmodo reached out to DoorDash to understand exactly how the company plans to use these metrics to end up at a dollar amount and will update this story with their response.
Dashers will continue to see all the same information about an order before accepting it, except now the delivery’s guaranteed earnings will include both DoorDash’s contribution and anything a customer tipped at checkout. How that breaks down dollar by dollar, though, is only revealed after a delivery has been completed. Any tips left after delivery will also be disclosed in this breakdown.
DoorDash CEO Tony Xu announced on Twitter last month that the company was implementing a “new model [that] will ensure that Dashers’ earnings will increase by the exact amount a customer tips on every order” after being dragged for its payout practices. The company, which was recently valued at $12.6 billion, originally implemented this policy in 2017 but dashers have reportedly been confused by it ever since.
DoorDash recently came under fire along with several other gig-economy operators like Amazon Flex and Instacart for similarly sketchy wage practices. This controversy has since prompted a class-action lawsuit against DoorDash as well as an investigation by the San Francisco Office of Labor Investigations.