DoorDash settles unfair tipping lawsuit for $2.5M

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DoorDash is settling its tipping lawsuit for $2.5 million.

Most people are probably familiar with the trouble that DoorDash got into a few years ago. The meal delivery company misled customers regarding its tipping policies, resulting in a tremendous amount of backlash. Consumers were under the impression that the entire tip went to the delivery driver. In reality, DoorDash was pocketing the money.

Now, nearly two years later, DoorDash has agreed to settle a lawsuit brought against it for that practice. It will pay $2.5 million to bring the drama to an end. That being said, the company still denies any wrongdoing.

DoorDash Foots the Bill

The lawsuit settlement puts an end to a multi-year saga for DoorDash, its drivers, and its customers. As noted, the company has agreed to pay a total of $2.5 million to settle the suit.

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Most of the money, $1.5 million to be exact, will go to drivers who made deliveries in the Washington, D.C., area during the time that the deceptive tipping policy was in place. That is because the suit was levied against DoorDash by the D.C. attorney general, Karl Racine. The remainder of the money will be split between the city of D.C. and two local charities in the area.

Racine said in a statement, “Today’s settlement rights a wrong that deceived D.C. consumers and deprived workers of monies that they should have been paid. The law applies to these [gig economy] companies just as it does their brick-and-mortar counterparts.”

However, the most impactful change has already occurred. In September 2019, DoorDash implemented a new pay model. Under it, drivers now get 100 percent of all tips on top of the base rate they receive for each delivery. While the change was not part of the lawsuit settlement, DoorDash did agree to continue using it moving forward.

Righting a Wrong

DoorDash’s tipping policy originally came under fire in 2019 when an NBC News article unveiled the deception. At the time, drivers received a base rate for each delivery. Then, when a customer added a tip, DoorDash applied that money towards the base rate rather than giving it directly to the driver. In essence, whenever a tip was added to an order DoorDash paid less but delivery drivers didn’t get anything extra.

Attorney Bryant Greening says, “DoorDash’s tip structure essentially picked the pockets of its most dedicated workers. The company deviously sought ways to pad its bottom line, while customers believed they were supporting Dashers working tirelessly to make ends meet.”

Customers were understandably upset when the policy came to light. Most people simply assumed that their tip went to the driver and not the company.

Currently, DoorDash operates in more than 4,000 cities around the world and delivers food to more than 18 million customers. It has a network of over one million delivery drivers, referred to as Dashers.

The company is fresh off of its IPO filing earlier this month. It has gained a significant advantage in the food delivery market, claiming 49 percent of all sales in the month of September. Uber Eats, the company’s biggest competitor, had just 22 percent.

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