Hello and welcome to Oversharing, a newsletter about the proverbial sharing economy. If you’re returning from last week, thanks! If you’re new, nice to have you! (Over)share the love and tell your friends to sign up here.
We talked last week about how DoorDash recently overtook Grubhub to become the leader in US online food delivery. DoorDash surged ahead thanks largely to $2 billion in financing from investors like Softbank. Money isn’t everything, but it’s helpful to have a big pile of it when a lot of your growth depends on giving out coupons and free stuff to customers to get them to start using your platform.
What we didn’t talk about was the driver side of that equation, which is where things really get weird. You might recall DoorDash came under fire earlier this year for using customer tips to subsidize driver wages. DoorDash promises a “guaranteed minimum” payment on each order, and it counts customer tips toward that minimum, rather than on top of it. Here’s how DoorDash explains this on its help page:
I’d guess most DoorDash customers don’t fully appreciate how their tips are being used, so let me spell it out: So long as your tip counts toward the guaranteed order minimum set by the company, it doesn’t matter to the worker whether you left it. They get paid the same regardless. Who it matters to is DoorDash, because if you don’t leave a tip, the company has to cough up the minimum pay for the job itself.
DoorDash is essentially using a tipped minimum wage. In many but not all states, employers can pay tipped employees like waiters and bartenders less than the prevailing minimum wage as long as they earn enough tips per hour to make up the difference. This reality of how tipping works is at odds with the popular conception among US consumers that a good tip ought to be earned by the worker. It’s one of many reasons why tipping is such an abysmal practice.
Federal law requires employers to pay minimum wage workers at least $2.13 per hour, plus more if they don’t earn enough in tips to meet the prevailing minimum wage. Many states require the employer to pay more than $2.13, and limit the amount of tips (called a tip credit) they can put toward meeting the combined minimum. Arizona, for instance, requires employers to pay a minimum cash wage of $8 an hour and limits the tip credit against the minimum wage to $3, for a combined rate of $11 an hour.
DoorDash’s policy of paying workers a base rate of $1 and then an unlimited tip credit would run afoul of that federal minimum for tipped workers, but DoorDash workers are independent contractors, not employees, and so they aren’t protected by federal (or state, or local) labor law.
If DoorDash workers were suddenly found to be employees, on the other hand, as could happen under a bill being considered in California, then it would be a different story. In California specifically, DoorDash would have to pay couriers the full state minimum wage of $12 an hour out of its own coffers. Any customer tips would be extra on top of that, as they should be.
In a lengthy blog post last week, DoorDash CEO Tony Xu defended the company’s tipping practices. DoorDash, he said, had held worker roundtables about its pay policies and conducted online surveys (h/t to Eric Newcomer for the link), and would be sticking with a guaranteed minimum that included tips, which “means that Dashers are more likely to accept all kinds of deliveries because they know what their earnings will be even if the customer provides little or no tip.” This would also be the case if DoorDash workers were protected by a minimum wage, but, the gig economy!
Is DoorDash’s policy tip theft? I am not a lawyer, but you can see why it rubs people the wrong way. Tips are another way in which DoorDash conceals the true cost of its service—as a customer, you pay service and delivery fees, but you are also expected to leave a tip through the app, where DoorDash can see it, that is really a wage. You bear the labor cost so that DoorDash, a company with $2 billion in funding, doesn’t have to.
It’s worth remembering that DoorDash isn’t the first delivery company to be accused of doing something sketchy with tips—Postmates just agreed to an $85,000 settlement over alleged tipping violations—and it certainly won’t be the last. A tip: If you want to be sure your tip is going to the worker, don’t use the app. Leave it in cash.
…are no fun, especially when they’re between Uber and Lyft and labor unions. The ride-hail companies are in talks with “a few large unions” to exempt drivers from full employment protections in California, the New York Times reported over the weekend. One of those unions is the Service Employees International Union, which represents roughly 2 million US workers.
California is weighing a bill to change state labor law, known as AB5, that seems likely to declare ride-hail drivers employees instead of independent contractors. Uber and Lyft, who have vocally pushed back on California’s legislation, now seem to be hoping to broker a back-room deal that would create a carve-out for their workers, and help them avoid paying the estimated $3,600 in added costs per driver of employee classification.
Uber worked with a union to create an advocacy group for drivers in New York City in 2016 as a preemptive move against drivers attempting to organize. The group that was formed, the Independent Drivers Guild, advocates on behalf of drivers and has successfully pushed for major changes including Uber’s adoption of tips and the city’s pay floor rules for ride-hail drivers, but it is explicitly not a union.
Drivers in California, meanwhile, are angry at anti-AB5 messaging Uber and Lyft have pushed on them. One driver told Recode he automatically signed a petition from Uber without realizing what it was. Another driver told something similar to CBS San Francisco. Lyft didn’t send a pre-written petition, but used its app to push out a form for drivers to fill in with their name and message, and send to their legislators.
I’m fortunate enough to never have received a push notification from an employer asking me to sign a petition or “Take Action” with an email to my legislators. I imagine it would be quite stressful! We live in a world where our information is never really private, and false urgency pervades everything from Slack messages to the news cycle, but there is something especially icky about a company using the contact information it has on file for you—contact information you had to provide to be able to do the job!—to push a political agenda.
Best Burger Corp.
The BBC set up a fake burger restaurant to see how easy it was to start selling food on Uber Eats. Then they made a video about it.
“I am astonished by what I saw, but also very, very alarmed,” says Mark McGlinn, the food safety expert who received the burger that the BBC reporter grilled on his patio, topped with lettuce, and balled up in some foil for an Uber Eats delivery person to pick up. Tell me this is not one of the saddest burgers you’ve ever seen.
“We’re in desperate times, it seems to me, if very, very large food delivery platforms can be operating in this way,” says McGlinn.
Uber told the BBC in a statement it was “deeply concerned by this breach of our food safety policy” and “it is unacceptable that a restaurant that did not meet our requirements was able to use the platform.”
For more fake restaurant content, I highly recommend this Vice video from a reporter who turned his shed in Dulwich into TripAdvisor’s top-rated restaurant.
The scooter bubble has bred an I-rode-a-scooter-and-wrote-about-it bubble:
Scooter Scofflaw: Police Pulled Me Over As I Rode Downtown (Rivard Report)
Elsewhere, Lisbon is battling the “scourge” of electric scooters with fines of €60 to €300 for companies whose scooters clutter up public rights-of-way.
This time last year.
Getaround buys Norwegian car-sharing company Nabobil for $12 million. Uber warns UK against over-regulating driverless cars. Uber co-founder Garrett Camp buys $72.5 million Beverly Hills estate. Careem shuts Sudan operations per Uber deal. Former Uber exec Emil Michael vetted for Trump cabinet position. The Uber Eats economy. Uber adds bikes and scooters to main map. Grocers test prepared foods delivery. Airbnb launches luxury rentals. Lagos one of Airbnb’s fastest growing markets. LA home-sharing rules take effect. Google VP of finance joins Postmates board. Lyft donates $150,000 in rides to US immigration groups. Lyft driver arrested for sexually assaulting passenger. Uber settles with UK women who accused driver of sexual assault. Driver app Mystro says it was blocked by Lyft. Uber Driver Pulls Out Sex Toy on Cops Who Feared It Was a Gun. NYC Family Accused of Running Illegal $5 Million Airbnb Ring. Cash deserts. Robot chefs. Scooter rage.
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