Despite the fallout earlier this month over alleged “tip theft” on the part of Instacart, DoorDash is defending its own policy of using worker tips to supplement their base wage. If this sounds slimy, it is. It’s also a good reason to always tip in cash.
Speaking with Bloomberg on Thursday, the company’s CEO Tony Xu appeared to insinuate the only reason anyone’s upset that DoorDash has this policy in place is because other companies have been called out for similar practices. He told Bloomberg that the company has used the model “for two years now, and it’s unfortunate that the activities of others have mischaracterized what we’ve been doing for two years.”
Here’s the thing though. DoorDash, a food delivery service, relies on the labor of its contractors called “Dashers.” When people add additional tips to their delivery service tab, they reasonably assume they are tipping the delivery person—rather than the company. DoorDash previously told Bloomberg the model “was designed to ensure that Dashers are more fairly compensated for every delivery,” but DoorDash isn’t exactly hurting for cash.
In fact, Xu spoke with Bloomberg this week as the company was announcing its valuation had skyrocketed to $7.1 billion, which the site noted is up roughly $6 billion in less than a year’s time. Per Bloomberg:
Investors haven’t been deterred. Dragoneer Investment Group and Singapore’s state-owned investment firm, Temasek Holdings Pte, together led the new $400 million investment in DoorDash, the company said. The $7.1 billion valuation is up from $1.4 billion less than a year ago. The deal caps an eye-popping year of fundraising for DoorDash, which raised $535 million in March and $250 million in August.
So while DoorDash is raking in heaps of money, its workers are having their tips shaved. It’s the very practice that Instacart attempted to give a shot before outcry led to its reversing the policy.
“Tips should always be separate from Instacart’s contribution to shopper compensation,” Instacart CEO Apoorva Mehta wrote in a Medium post in February in response to the mounting backlash—which, correct. In addition, Instacart raised the base pay of its workers and back paid its shoppers their hard-earned goddamn tips.
Still, DoorDash—perhaps emboldened by the fact that Amazon is also reportedly engaging in this incredibly shady practice—appears to remain mostly undeterred by criticism. (Though shaming a company into changing its unfair compensation practices has certainly worked before.) In the meantime, tip in cash. For everything. All the time.
Clarification: Added context on DoorDash’s funding.
