Class Action Claims DoorDash Uses Tips to Subsidize ‘Guaranteed Minimum Payments’ Owed to Workers [UPDATE]
Last Updated on April 28, 2020
Peter et al. v. DoorDash, Inc.
Filed: September 25, 2019 ◆§ 3:19-cv-06098
A proposed class action lawsuit claims that DoorDash uses customer tips to cover the minimum payments it agreed to give workers, instead of adding tips on top of the pay for delivery jobs.
Case Updates
Update – Judge Sends Case to Arbitration
On April 23, U.S. District Judge Jon S. Tigar ordered the claims detailed on this page to be handled through binding arbitration.
In an order granting DoorDash’s motion to compel arbitration, Judge Tigar reiterated that the plaintiffs agreed to binding arbitration when they signed up for accounts with the online food delivery company. Contained in the “dispute resolution” section of DoorDash’s terms and conditions is a provision stipulating that a user agrees to resolve any dispute through arbitration rather than in court, the judge outlined. Though DoorDash’s 2018 terms and conditions allowed for users to opt out of binding arbitration within 30 days of signing up, neither plaintiff did so.
The nine-page order granting DoorDash’s push for arbitration can be read here.
A proposed class action filed in California claims DoorDash’s tipping policy is deceptive to customers and deprives workers of the financial benefit of their tips.
DoorDash, Inc., the suit explains, provides a platform through which customers can order food from participating restaurants on the company’s app or website and have it delivered to their door by workers known as “Dashers.” According to the case, the defendant pays Dashers a guaranteed minimum amount for each delivery and allows customers to add tips to their orders. From the case, citing the defendants’ website:
“We guarantee Dashers will earn a minimum amount, including tips, for completing each delivery. This ‘guaranteed minimum’—which Dashers see before accepting any delivery—is based on the estimated time and effort required to complete that delivery.”
The case claims, however, that DoorDash has a policy of using customer tips to “subsidize guaranteed minimum payments that DoorDash owes its drivers.” For example, the complaint states that if a Dasher completes a delivery with a guaranteed minimum payment of seven dollars and receives a three-dollar tip, DoorDash would credit this tip toward the minimum payment, meaning the Dasher would receive exactly seven dollars while the company would only spend four. The lead plaintiffs in the case, who are both DoorDash customers, claim this practice robs Dashers of their hard-earned tips in favor of saving their employer money.
The case notes that the defendant fails to inform customers that tips will be used for the financial benefit of DoorDash instead of the Dasher who made the delivery. If customers were aware of this policy, the suit argues, they would be less likely to leave tips. The case claims DoorDash’s tipping practice “violates generally accepted ethical principles of business conduct” in that the defendant fails to clearly and honestly disclose its policy of using tips for its own financial benefit instead of adding the money to workers’ earnings.
The suit looks to represent a class of all customers of the defendant in the United States who placed an order and attempted to pay a tip through the DoorDash app, with proposed subclasses for customers in Illinois and Missouri.
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