Tips are a great way to show appreciation for outstanding customer service, and they especially are appreciated in the consumer-facing elements of both foodservice and delivery driving. However, food delivery applications such as GrubHub have recently gained attention not for the convenience that they provide but for their questionable practices involving their employee tips. So here is what you need to know about corporate tip skimming in the delivery driving world.
What is Tip Subsidization?
The attention that follows delivery drivers losing their tips is not actually “stealing,” which implies an illegal confiscation of tips. What is happening in these applications is actually called tip subsidization. Tip subsidization is when employers account tip money in the employee’s promised pay, and this is legal when it is included in the lengthy contract that drivers agree to when signing up for the system.
In these applications, the company will guarantee minimum earnings for completing a delivery, and tips will count towards that minimum earning. For example, in a tip subsidized work environment, if the employee was guaranteed $10, but received $10 in tips for that delivery, the employee would still only earn a total of $10. In this case, the delivery driver would need to earn more than their minimum promised wage in tips before actually receiving any tip money.
How Does This Affect Driving Tips?
In a tip subsidizing system, a tip no longer serves as extra income for the driver but rather as increased revenue for the business. Tip money is intended to reward drivers for their service and help offset some of the costs of convenience (such as the driver’s gas money). Without the added benefits of these tips, the drivers are left with much less than the consumer intends. This tip subsidizing can cause significant financial strain for drivers in the industry.
How Can We Fight Tip Subsidization?
As a consumer:
Because delivery drivers are in such high demand right now, consumers are taking notice of how tip subsidization is affecting drivers. This particularly involves a disinterest and protest of tip subsidizing businesses. For example, DoorDash removed tip subsidization following backlash it faced for this practice. If you are a consumer who hears about malpractice, it is best to stand up for these employees. Additionally, when you find yourself acting as a customer for food or other delivery sites, tip in cash, when possible. This provides a better chance that the tip goes to the intended individual. You might also consider giving your business solely to fair and ethical companies.
As a driver:
When you are working as a driver, it requires focus and dedication to make the income you are seeking. This is made even more challenging when the corporation you are driving for is taking your tip money. If you find yourself in this situation, do not worry! Instead, look at your options for other driving services. With skills and experience in the industry, you will likely be able to find a more reasonable company to work for. You can also make your voice heard through social media platforms and driving community forums. Keep an eye on the tipping situation as it continues to develop and unfold so that you can rejoin the business if their values and practices change.
Which Driving Companies Subsidize Tips?
DoorDash was the primary suspect in the conversation surrounding tip subsidization. After protests and backlash, they have recently removed this element of their business model; however, it is still unclear as to whether or not drivers will retroactively receive the tip money they earned. Amazon has also been accused of subsidizing tips from their drivers, but these accusations are still being investigated. We will keep you updated on the status of potential Amazon tip subsidization as more information becomes available.
Stay in the Know
Knowledge is power in any business, which is why it is important that you stay informed as a driver in the industry. For information about how to stay protected as a delivery driver, join the Rapidgo Driver community. This organization allows drivers to coordinate and inform one another about the happenings of the driving industry. This platform also provides courses designed to get you prequalified for driving jobs and to help you stay safe on the road. Sign up here today to get started!
