DoorDash hit with lawsuit alleging it misled customers over driver tips

DoorDash is continuing to deal with the fallout around its tipping policy. The attorney general of Washington, DC, Karl Racine, filed a lawsuit against the food delivery company on Tuesday, saying it used "deceptive" practices. The suit alleges DoorDash misled customers, making them believe their tips were going to delivery workers when the money actually went into the company's pockets.

After customer backlash, DoorDash changed its tipping policy in August to give all tips to its delivery workers -- or as the company calls them "Dashers." But DC's attorney general said DoorDash needs to do more.

"DoorDash did not provide any restitution for consumers who had been misled by DoorDash's deceptive tipping practices," the attorney general's complaint reads. "Nor did it provide any relief to workers who had their tips taken by DoorDash to subsidize its business."

The on-demand economy, which includes delivery companies like DoorDash, Instacart, Postmates and Grubhub and ride-hailing companies like Uber and Lyft, has been under fire over the past few years for not doing enough to protect workers. Lawsuits have been filed against Instacart and Uber over their tipping policies. And several other suits have been brought over the companies' classification of their workers as independent contractors rather than employees.

DoorDash's tipping policy had been in place since 2017, but it wasn't until articles were published by The New York Times and NBC News that the turmoil began. The way DoorDash's policy worked is the company would pay delivery workers a base rate for each delivery. When a customer tipped through the app, that money would go toward the base rate instead of being tacked on top. That means whenever tips were involved, DoorDash would pay less of that base rate.

"We strongly disagree with and are disappointed by the action taken today," a DoorDash spokeswoman said in an email. "Transparency is of paramount importance, which is why we publicly disclosed how our previous pay model worked in communications specifically created for Dashers, consumers, and the general public starting in 2017."

Racine is looking to recover all of the tip money customers paid through the DoorDash app from 2017 until it reversed its policy. In the lawsuit, he said any reasonable person would expect a "tip" to go to the delivery worker and that the company's FAQ on tipping was "confusing."

"Consumers using DoorDash were unlikely to know about or fully understand this payment model," the complaint reads. "The FAQ was ambiguous, confusing, and misleading because it encouraged consumers to tip, but did not disclose that a consumer's tip would, in the vast majority of circumstances, make no difference at all to a Dasher's pay and would only go toward subsidizing DoorDash's share of Dasher pay."

DoorDash said that since it changed its policy, it's worked with an independent third party to verify it always pays 100% of tips to delivery workers. The company spokeswoman said DoorDash intends to fight the lawsuit.

"We believe the assertions made in the complaint are without merit and we look forward to responding to them through the legal process," she said.