DoorDash is on the receiving end of a proposed class action lawsuit that alleges the company has deceived and misled the public into believing the full tip amount entered on its app is received by delivery workers. The 17-page complaint out of New York’s Eastern District charges DoorDash knew yet failed to disclose that the tip amount entered by customers is in whole or in part used to subsidize the mobile food delivery platform’s cost of doing business.
Front and center in the lawsuit is the July 21New York Timesreport written by Andy Newman, who went undercover as a DoorDash delivery workersubject to the company’s alleged tip retention practices. Newman discovered that he received no tip at all for almost two-thirds of his deliveries, the case states, with DoorDash effectively pocketing tips that came in through the app. In order for delivery workers to assuredly retain their tips, they had to be paid by customers in cash, according to the complaint.
At issue in the lawsuit is DoorDash’s policy of offering delivery workers a guaranteed minimum payment for each delivery. Customer tips paid through the app go toward subsidizing DoorDash’s contribution to its per-delivery guarantee, according to the suit, and not toward a delivery worker’s pay.
“In order words, the tip entered by the customer was simply subsidizing DoorDash’s labor costs,” the case reads, “and was not rewarding the delivery worker for his or her service.”
The case goes on to note that DoorDash announced three days after the publication of theNew York Timesreport that it would end its “widely criticized tipping policy.” The company’s CEOwrote on Twitteron July 23 that DoorDash would switch over to a new business model that would ensure delivery workers’ earnings would increase by the exact amount a customer tips on each order.
The plaintiff behind the case, who has made more than 35 purchases through the DoorDash app and has tipped his delivery workers, says he would not have used the service had he known the company retained tips paid through the app to offset labor costs.
The lawsuit looks to certify a proposed class of consumers who used DoorDash and paid a tip through the app.