D.C.’s attorney general is suing DoorDash over its tipping practices.

Rachel Kurzius / DCist

While consumers can tip gig economy workers like rideshare drivers and food deliverers through their respective apps, it’s not always clear that the money is making its way to workers directly in the same way, say, a $5 bill would.

Some companies have used that tip money towards their base pay for contract workers to lower their labor costs, rather than have the tip serve as additional payment. That payment practice has been longstanding, but received fresh attention and backlash last February when the payment stub of an Instacart worker, which showed a payment of 80 cents for 69 minutes of work despite a $10 tip, went viral.

Instacart hurriedly changed its tipping policy amid the controversy, but it wasn’t the only company to employ that model. DoorDash, the largest on-demand food delivery company, originally defended its tipping model in the spring, despite a drumbeat of criticism and media coverage.

Among those paying attention to those media reports was the office of the D.C. attorney general. The District’s AG launched an investigation into DoorDash—which operates in thousands of U.S. cities, including the District—in March of this year that wrapped up in September, examining more than two years of DoorDash’s business practices. (It wasn’t the only such probe—San Francisco officials also launched a labor investigation into the company’s tipping policy that month.)

DoorDash announced in July that it would change its tipping policies for its contract workers, who the company calls “Dashers.” (These contract workers do not receive benefits or a traditional salary.) About a month later, DoorDash’s policy changes still hadn’t gone into effect, Recode reported. When DoorDash ultimately revealed how its new payment system would work at the end of August, it said it would not be retroactively paying any workers the tips that consumers intended for them. As of October 1, all Dashers now operate under the new payment model, per the company.

D.C. is home to tens of thousands of DoorDash contractors and customers, according to the AG’s office. According to 2018 research from Gallup, 36 percent of American workers are a part of the gig economy.

Today, D.C. A.G. Karl Racine announced that his office was suing DoorDash for violating D.C.’s consumer protection laws because the company allegedly misled customers, who believed that higher tips would mean correspondingly higher wages for workers. The lawsuit calls for the court to order DoorDash to pay workers back for the tips they lost out on (Racine’s office estimates this amount in the millions of dollars), and to pay civil penalties to the District for violating these rules.

“DoorDash misled consumers, who reasonably believed that their tips would go to workers, not the company’s bottom line,” Racine said in a statement. “We are filing suit to put a stop to this deceptive practice and secure monetary relief for those harmed by DoorDash’s actions.”

DoorDash, for its part, maintains it did nothing wrong. “We strongly disagree with and are disappointed by the action taken today. 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,” the company said in a statement provided to DCist. “We believe the assertions made in the complaint are without merit and we look forward to responding to them through the legal process.”

The company sent along an update on its new pay model, which it published last week. Payment to U.S. Dashers has increased by an average of 12.5 percent under the new model, per research from a third-party research firm that DoorDash hired.