When a Tip is not a Tip

The Lempert Report
September 10, 2019

Tipping for food delivery people

I’m one of those people who really hate the tip jar in coffee places. My feeling has always been that if a business doesn’t pay their people enough, customers shouldn’t have to pony up. I’m also that guy who tend to over tip waiters when they do a good job.

Which is why the practice for food delivery tips anger me.

We’ve spoken before how the companies typically have cheated their GIG employees and taken a bit or all of the tips to offset their losses.

CNN has a new report on how many of these food delivery companies are under increased scrutiny over how some worker tips contribute to their base pay. And how some changes are taking place.

A New York Times reporter spent time as a Door Dash delivery person and showed how customer tips contribute to worker pay.

After the column appeared, DoorDash CEO Tony Xu tweeted that the policy would change going forward and Dashers' earnings would increase by the exact amount a customer tips.

"We thought we were doing the right thing by making Dashers whole when a customer left no tip. What we missed was that some customers who did tip would feel like their tip did not matter," he tweeted.

DoorDash, Amazon and Grubhub have encouraged customers to leave gratuities, CNN reports, but they often don't reach workers in the traditional sense, according to tipping experts they spoke with.

In some cases a big tip will contribute to a payment that's already guaranteed to workers. A worker may be guaranteed $15 for a delivery, or an hour's work. If their base pay and the customer tip only reach $12, the company will kick in the extra $3. But if the customer left a large tip, pushing the total payment over the $15 threshold, the company wouldn't have to kick in extra money.

Michael Lynn, a professor at Cornell School of Hotel Administration who researches tipping, told CNN Business these practices are morally wrong.

"This is a defrauding of the consumer," Lynn said. "It's a voluntary payment from the consumer. So it's important that they not be cheated or duped into giving money to a company they wouldn't otherwise do it. I would be willing to tip the delivery person, I'm not willing to tip DoorDash."