Apps like Instacart, DoorDash, and AmazonFlex have come under fire for allegedly employing murky tipping practices, where it’s unclear if gig economy workers are actually able to keep their tips or if the companies are taking a cut.
Now, a new piece of legislation in New York City is being introduced to combat shadiness surrounding tipping. Ritchie Torres, a council member from the Bronx, is currently drafting a bill that would legally force apps to tell customers if they are pocketing worker’s tips.
“Customers are less inclined to do business with a company that is systematically exploiting its own workers,” Torres told the New York Daily News. “There’s an underclass of independent contractors who are brutally exploited in our brave new world. There’s a special place in hell for companies that confiscate the tips of low-wage workers. These tips are in fact profits for the companies — dollars the companies should be paying workers out of their own profits.”
Torres’s bill highlights the need for regulation in an economy where there’s little oversight of how gig workers are treated.
There are approximately 57 million workers in the US’s gig economy. They drive cars, run errands, shop for groceries, paint houses, take care of apartment rentals, and walk dogs. But they don’t get access to benefits like health insurance or workers’ comp and aren’t guaranteed regular hours, so many of them rely on tips to balance out their income.
Some companies don’t let these workers keep all of their tips, however. Apps like DoorDash, an on-demand food delivery service, count these tips as money that is applied to workers’ total payment, as opposed to extra. If a DoorDasher accepts a delivery that would pay them $10, for example, and a customer tips $5, the DoorDasher still walks away with $10, not $15. The company promises a minimum payment but counts tips toward that minimum.
DoorDash is transparent about this policy, but in February, several companies that employ a similar type of payment system were accused of “tip theft” after one Instacart receipt went viral. One Instacart shopper noticed on his delivery receipt that Instacart was taking a cut from a $10 tip, and that the worker was actually only netting an 80-cent tip.
Customers were furious and vowed not to use services with such policies. Workers also spoke up on online forums like Reddit, pointing out that some of these companies are purposely deceptive about their tipping practices.
After initially telling reporters that pocketing the tip was a “glitch,” Instacart announced it would change its payment policy in February, so that tips would be separate from payment. Instacart CEO Apoorva Mehta also openly apologized to workers. But companies like DoorDash still have not bowed to public pressure, even as workers are now boycotting companies that employ such tipping practices.
In the bill that Torres is trying to introduce, companies that consider tips to be essentially subsidies for worker pay would have to openly disclose this to customers, either by explicitly stating it in their terms of service or by sending a notification as a transaction is being approved. The idea is to try to expose these types of practices; shoppers might be less inclined to use the service, the thinking goes, and systemic change could come from consumer pressure.
And in the meantime, gig workers who rely on tips and work for companies with deceptive gratuity scales say it’s always best practice to tip in cash.
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