Aug 22, 2019 - Economy

DoorDash's new policy will treat tips as tips

Photo: Smith Collection/Gado/Getty Images

DoorDash is finally beginning to roll out a new pay model for its delivery drivers that will treat customer tips as additional earnings, after announcing nearly a month ago that it will shift its policy.

Flashback: DoorDash's two-year-old pay model, a twist on the "tipped wages" model familiar to many service workers like waiters, came under fire last month. Critics said its approach was deceptive to customers.

How it works: Under the new model, Dashers (the company's name for its meal delivery drivers) will be shown for each delivery request a base pay, plus any promotions they might earn, before they choose whether to take the job.

  • That base pay will vary per delivery job, but will be anywhere between $2 and more than $10.
  • Promotions they might qualify for will include "peak pricing" in times of high demand (similar to Uber's "surge pricing"), and bonuses for completing a certain number of deliveries in a period of time.
  • Any and all tips customers choose to add will be on top of the above pay from DoorDash.
  • In short: Tips will be exactly that — tips. (Here's a look at how the old model worked.)

The big question: Why didn't DoorDash just do this two years ago when it decided to create a new pay model?

  • In short, the company says it's because it was focused on providing earnings that better matched each delivery's level of effort, along with more consistent earnings from order to order.

Yes, but: DoorDash also tells Axios that one trade-off it expects under the new model is that earnings from one order to the next will vary more, though it also predicts that overall, earnings for its Dashers will be the same if not higher. The company says it has partnered with an outside firm that will audit its data to see whether its prediction of higher earnings bears out.

It says the new pay model will be fully rolled out to all Dashers by the end of September.

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