Attorney General Karl Racine of Washington D.C. filed a lawsuit against DoorDash for allegedly deceiving consumers related to their tips for workers.
In the lawsuit, AG Racine alleged that DoorDash encourage consumers to give tips for food deliveries. However, it is pocketing the tips instead of passing it to the workers who made the deliveries.
Additionally, the attorney general claimed that the food delivery service provider treated the tips as extra profit for itself.
AG’s probe found DoorDash used consumer tips to offset labor costs
AG Racine filed a lawsuit against DoorDash after conducting an investigation into the company’s tipping practices from July 2017 until September 2019. His office found the company’s deceptive payment model, in which a delivery worker receives the same pay in most cases no matter how much tip a consumer gave. The attorney general determined that the company used consumer tips to offset its labor costs.
He is seeking to recover millions of dollars in tip money that consumers thought were passed on by DoorDash to workers. He is also seeking to impose civil penalties against the food delivery service provider.
In a statement, AG Racine said, “DoorDash misled consumers, who reasonably believed that their tips would go to workers, not the company’s bottom line. We are filing suit to put a stop to this deceptive practice and secure monetary relief for those harmed by DoorDash’s actions.”
DoorDash denies the allegations
A spokesperson for DoorDash denied the allegations of AG Racine and called it “without merit.”
“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. We’ve also worked with an independent third party to verify that we have always paid 100% of tips to Dashers. We believe the assertions made in the complaint are without merit and we look forward to responding to them through the legal process.” said the company’s spokesperson.