In the coming weeks, customers who order a meal through DoorDash, the nation's biggest food-delivery app, will get something extra: a promise that when they tip, the money will go straight to the worker rather than into DoorDash's pocket.
The company's 1 million delivery workers also will get something else extra: an increase in minimum base pay.
The result, the company promised Thursday, will be that on average, the workers, known as Dashers, will make more money -- though how much more remains unclear -- and "on average" means that some Dashers will make more and others will make less on a particular order.
DoorDash had being widely criticized for its old pay model, in which customer tips effectively went to DoorDash rather than to the worker in many cases. Last month, after a New York Times article described the tip policy, the company said it would drop it.
The new system is being rolled out gradually and will be in place nationwide by the end of September, DoorDash's CEO, Tony Xu, said in a phone call.
There is a catch for the workers, though: DoorDash's old policy had the counterintuitive effect of insulating them against customers who left no tip or a small tip. Many Dashers liked it; some hated it.
Xu said that under the new policy, "there's going to be greater variability" in earnings.
"If there's two orders, and Dasher A had a $3 tip and Dasher B had a $6 tip, Dasher B will make $3 more," Xu said.
But he said the company would engineer its payouts to make sure that workers make "meaningfully more" than they do now.
In the piecework world of delivery apps, like across much of the so-called gig economy, workers are considered independent contractors and are not covered by minimum-wage laws, and the apps use complex and frequently changing methods to calculate pay.
Under the new policy, DoorDash is increasing its base pay from $1 per order to at least $2, and often more, based on variables like the distance and difficulty of delivery. It also will run more "promotions" in which workers can make more during certain hours or in certain neighborhoods.
Xu also said that before accepting or rejecting an order, a Dasher will be shown the whole amount of the payout -- base pay, bonus pay and any tip the customer added at checkout -- as well as the pickup and delivery location.
Many delivery workers find such information crucial in deciding whether an order is worth doing, and many of DoorDash's competitors do not show all of that information.
Xu said that last year, the average DoorDash worker made $17.50 per hour, though delivery apps define an "hour" as time actually spent doing pickups and deliveries, not time spent waiting for orders to come in.
Here is how DoorDash's old system worked: If DoorDash guaranteed a worker $7 for delivery and a customer did not tip, DoorDash would pay the worker the whole $7. If the customer tipped, say, $3 on the app, then DoorDash would pay the worker only $4, then add on the $3 tip so that the worker would still get just $7.
When customers learned of this system, it seemed to many of them that they were effectively tipping DoorDash rather than the person who delivered their food.
Business on 08/23/2019