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DoorDash drops policy of keeping tips meant for workers

  • DoorDash, the nation's largest on-demand food delivery app, said it's changing its policy so delivery workers will get tips from customers. 
  • The company's CEO announced the flip on social media after a barrage of criticism followed a New York Times account of how DoorDash compensates its more than 400,000 workers.
  • DoorDash previously defended its system of using customer tips to subsidize what it pays couriers as ensuring all orders were worth fulfilling.

Food-delivery app DoorDash is ditching a much-maligned policy that effectively had it not passing along customer tips to its delivery workers.

The decision, announced on social media by the company's CEO, Tony Xu, came amid an onslaught of angry feedback that followed a New York Times story detailing how DoorDash treats those making deliveries on its behalf. DoorDash refers to its delivery workers as Dashers, and counts more than 400,000 nationwide.

"We're changing our model -- the new model will ensure that Dashers' earnings will increase by the exact amount a customer tips on every order," Xu tweeted on Tuesday night. "We'll have specific details in the coming days."

DoorDash, the country's biggest on-demand food delivery app, had a policy of offering Dashers a guaranteed base figure to make a delivery. In most cases, customer tips paid through the DoorDash app would be used to subsidize the company's contributions toward the fixed amounts, instead of increasing workers' pay.

"Their tip did not matter."

Before 2017, DoorDash paid workers a flat fee for each delivery and any gratuity paid by the customer. In his Twitter thread, Xu stated that DoorDash's average contribution to Dashers did not change from when it switched its policy. Still, "it's clear from recent feedback that we didn't strike the right balance. We thought we were doing the right thing by making Dashers whole when a customer left no tip," he wrote. "What we missed was that some customers who did tip would feel like their tip did not matter."

Xu's words came after thousands of people lambasted the company on social media, with some saying they would no longer use DoorDash and others vowing to give cash tips to DoorDash workers. 

"I don't believe that a single person intends to give a tip to a multibillion dollar venture-backed start-up," Louise Matsakis, a technology journalist, wrote in a widely retweeted tweet. "This deceptive model should be illegal."

Instacart in February got rid of a similar tipping policy after facing public ire, but DoorDash declined to do the same, with Xu at the time insisting the pay model ensures all orders were worth fulfilling. 

Christopher Webb, CEO at ChowNow.com, likened DoorDash's pricing and payout model to a black box: "I assume they will be more transparent going forward -- otherwise their problems will persist -- but as of  now it's still a mystery to those on the outside," emailed Webb. He started his company in 2012 as an alternative to DoorDash, UberEats, Grubhub and others by charging restaurants and regional chains a flat fee for software and online marketing tools. 

DoorDash did not return a request asking it to elaborate on its planned change in policy. 

For its part, Uber Eats said 100% of tips go to its couriers: "We're not subsidizing wages with tips," a spokeswoman told CBS MoneyWatch.

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