Not quite a "sharing" economy

February 11, 2019 6:01 AM

Through the policy, workers were guaranteed a base amount of $10 per delivery; Instacart would apply tips to the overall payment, according to Business Insider. For example, if a customer tipped $4, Instacart would only pay an additional $6 to the driver. If the tip was $6, the company would pay even less — just around $4 for that delivery. Some observers characterized this as a deceptive business practice equivalent to tip theft, but because of the relatively unregulated nature of the gig economy, delivery workers had little legal recourse.

After having been called out for using customer tips as a means to pay out less than otherwise would be required to delivery contractors, Instacart has reversed their policy and will stop counting tips towards contractor base pay. DoorDash and Amazon Flex, however, have no intent on changing their similar policies.
posted by tocts (51 comments total)

The gig economy needs to be burned to the ground. The definition of “contractor” and “employee” need to be tightly regulated. Tip thieves need jail time.
posted by GenjiandProust at 6:23 AM on February 11, 2019 [72 favorites]

After spending a bunch of time traveling outside the US, I've come to realize that I HAAAAAAAAAAAATE tipping culture.

Seriously, how about we mandate a fair wage for employees and get rid of tipping ?
posted by Pogo_Fuzzybutt at 6:26 AM on February 11, 2019 [42 favorites]

Wait until people realize this is basically how restaurant tipping works in most US states.
posted by cichlid ceilidh at 6:28 AM on February 11, 2019 [30 favorites]

Aw, crap. [runs off to see if Uber Mexico is doing right by their drivers]
posted by Tell Me No Lies at 6:35 AM on February 11, 2019 [2 favorites]

My husband is doing the gig thing to fill gaps in his income, and he hangs out on a variety of these gig apps' driver subreddits. Going by what he's said to me, a) drivers who pay attention have long known this tip thievery to be the case and hated it and b) drivers, at least sometimes, choose not to prioritize the apps that do this because they know they're going to get short shrift no matter how good their service is. It just strikes me as a self-defeating practice for the businesses in that sense - yes, you get a subsidy, but good luck keeping drivers who know what they're doing.

But then, I guess the whole point of the gig economy is that they don't care if they get or keep skilled drivers; they just want interchangeable warm bodies. Argh.
posted by Hold your seahorses at 6:48 AM on February 11, 2019 [6 favorites]

Not that I like tipping, not that I like the gig economy, but (at least as long as we're permitted to have cash, which I don't expect will be too much longer) tip in cash.

If you know that you will regularly be tipping people, get cash. Everyone has times where they forget or have an unexpected tippable situation, but in general, if you know that you're going to be eating at restaurants, getting deliveries, etc, get used to carrying cash. This is a simple pro-working-class thing that only requires a stop at the cash machine.

I had a mattress delivered a couple of months ago and - on the advice of metafilter - I got some cash to tip the delivery guys. They were pretty damn happy, and I feel that I got value for money just recollecting that I improved someone's day that much.
posted by Frowner at 6:48 AM on February 11, 2019 [63 favorites]

> Wait until people realize this is basically how restaurant tipping works in most US states.

It may be more insidious for delivery services because they can really optimize who gets orders when to minimize actual wages within acceptable delivery times.

And if they're paying by delivery, not time waiting, they have no incentive not to overhire, unlike a restaurant which will look awkward and lose money with excessive numbers of servers.
posted by smelendez at 6:57 AM on February 11, 2019 [4 favorites]

This kind of thinking seems endemic to corporations all over these days, and it's gotten visibly worse over my lifetime...not just the petty bullshit of taking away people's tips to feed the bottom line, but the absolute view of labour costs, especially front-line labour costs, as the place you ruthlessly prune every dollar.

I don't think that's new in the history of mankind, in fact, the gains of the labour movement to achieve a 5-day, 40-hour workweek and a minimum wage are proving to be hard to hold onto. What works is regulation, and what historically gets people there are strikes and violence because government does understand its role in keeping the peace, even if it does not understand its role in providing for the welfare of its people rather than its captains of industry.

What's stopping that from happening right now, barely, in part, I believe anyway, is the way that the modern coal mines have managed to redefine everything as entrepreneurial. It's not that their labour practices suck and are borderline illegal; it's that you are choosing to be your own boss. It's an interesting, if disturbing, trend. I keep waiting for Amazon to open up dormitories (I think Disney has some?) to house workers so they can charge them rent.

I would not see the cash tip as morally clean in this equation, even if it's better than paying the corporation and it helps the corporation to understand that labour costs are the costs of doing business and if you can't pay your workers decently, your business model does not work, redo it or close up shop. (I say this as someone involved directly in this in a small business.) It helps in that you are helping that worker. But it also maintains the system artificially because then people are still able to eke out a living and then the shareholders still get their ROI. Again, I think this comes down to government regulation - a decent minimum wage, and enforcement of such. The "server minimum," which we also have in Ontario, is in my opinion a bad precedent.

I have no solution except that my family eats out rarely, which doesn't help restaurants at all.
posted by warriorqueen at 6:58 AM on February 11, 2019 [5 favorites]

So when you tip them… they don't actually get it. The company takes the tip, and the worker's net pay remains the same

That's tip theft. It just is. That is clear-cut tip theft, and tip thieves are scum.
posted by Anticipation Of A New Lover's Arrival, The at 7:04 AM on February 11, 2019 [29 favorites]

Minimum wage laws in many (most?) US areas already work like this. Often minimum wage for tipped workers is something like $4/hour, with employers only required to make up the difference to the real minimum wage when tips don’t cover it.

A DC ballot initiative passed to just have a base minimum wage for everyone, but got completely hamstrung by the city government after lobbying by restaurant owners.
posted by vogon_poet at 7:04 AM on February 11, 2019 [6 favorites]

What's stopping that from happening right now, barely, in part, I believe anyway, is the way that the modern coal mines have managed to redefine everything as entrepreneurial. It's not that their labour practices suck and are borderline illegal; it's that you are choosing to be your own boss. It's an interesting, if disturbing, trend. I keep waiting for Amazon to open up dormitories (I think Disney has some?) to house workers so they can charge them rent.

You bring up the point that everything is entrepreneurial now. WeWork sells overpriced shared office space with "amenities" for startups and freelancers -- these are the people who carved "Don't stop when you're tired; stop when you're done" into the fruit in their fruit water.

Separately, they have a company called WeLive, which offers dorms with "amenities", often right next to the WeWork offices. And they have plans to offer some kind of banking services, and private schools.

I am personally skeptical that they will stay in business (they are burning money at truly manic rates), but they are at least trying to recreate the company town, except where everybody involved is an independent contractor.
posted by vogon_poet at 7:12 AM on February 11, 2019 [12 favorites]

"Your shit has been delivered! Would you like to offer a tip to our company's shareholders?"
posted by duffell at 7:13 AM on February 11, 2019 [14 favorites]

Self-shoutout for calling attention to this in a November MeFi thread on tipping.
posted by cichlid ceilidh at 7:13 AM on February 11, 2019 [5 favorites]

This is not entirely a gig economy thing -- it's a hospitality worker thing, and has been since 1966. It's the way wages work for many (if not most) tipped servers & delivery drivers in brick & mortar establishments across the nation. The concept is called "tip credits". Employers who take tip credits only pay a tiny amount -- as little as $2.13/hr in some states -- and the employees are required to declare enough of their tips to make up the difference between that and the minimum wage. If employees make more in tips, they keep it; if don't make enough tips to get up to the minimum wage, the employer makes up the difference, but in practice that is rare. If you're dealing with a big chain in a tip credit state, chances are pretty good that the folks who serve you are being paid this way. Some states & cities have eliminated the tip credit; here's an update on the recent tip credit discussion in New York State.
posted by ourobouros at 7:14 AM on February 11, 2019 [8 favorites]

Wait until people realize this is basically how restaurant tipping works in most US states.

But the restaurant tipping model is very explicit about this. You get paid 2-3 dollars an hour, you get your tips on top of that, end of story. (There are details about if you don't get tipped enough to make up real minimum wage, but the general gist is this.)

These apps say "you get X per gig!" but then don't say that what they mean is that the tip will be used for X, and they will fill in the rest of it, and no customer thinks that's how it works. (I assumed delivery people got paid some small amount, and got to keep all the tips on top of that, rather like waitstaff, not that they got paid less or more depending on how much I tipped. I'm not sure if the laws here are different for that kind of service, which I have not used.)
posted by jeather at 7:19 AM on February 11, 2019 [13 favorites]

A DC ballot initiative passed to just have a base minimum wage for everyone, but got completely hamstrung by the city government after lobbying by restaurant owners.

Initiative 77 has been discussed here before, but it’s worth noting in brief that hamstrung, here, means explicitly and entirely repealed by the city council. Restaurant owners were aided in their lobbying by a large number of those waitstaff and bartenders who are currently doing pretty well, mostly at higher-end places, and fear that in their individual cases, higher wages would be more than outweighed by lower tipping.
posted by musicinmybrain at 7:24 AM on February 11, 2019 [6 favorites]

"Your shit has been delivered! Would you like to offer a tip to our company's shareholders?"

THIS. Obviously this matters because of the impact on workers, but if you'll allow me to put on my Entitled Person hat: As a consumer, I'm giving my tip to the delivery person, NOT to your corporation! Jfc! I'm not surprised they're treating workers like crap, but I'm amazed they didn't anticipate the backlash from consumers for basically taking stealth donations.

I'm a little embarrassed that I didnt realize this was how tipped wages work. (Actually, I still don't get it - I thought under tipped wages, workers who don't make up the difference in tips are SOL. Which is worse for them, but from the customer's POV there's actually more of a point to tipping than under the Instacart model, yes? The point being that you're in a hostage situation, but at least the server is materially better off than if you hadn't tipped?) My excuse is that I am a lifelong California resident and by God I expect people to be civilized.
posted by sunset in snow country at 7:24 AM on February 11, 2019 [4 favorites]

I assumed delivery people got paid some small amount, and got to keep all the tips on top of that, rather like waitstaff, not that they got paid less or more depending on how much I tipped.

The restaurant industry and the Instacart tipping model described above are exactly the same. Say your delivery driver shows up to your neighbor's house, taking (for simplicity's sake) a half-hour to do so. Your neighbor doesn't tip at all. Then, they show up to your house, taking another half-hour to do so. You tip $10. At the end of the night, they fill out a sheet for their employer, declaring tips for all deliveries. The employer averages it all out as follows:
- Base rate: $2.13/hr
- Total tips: $10
- Base rate + tips = more than the minimum wage, so no need to pay them any more today

If both you and the neighbor had tipped $0, then the employer would have been required to pay the driver enough to get them up to the minimum wage in your area. So, if the minimum wage in your city is $10/hr, the employer would have had to pay $10/hr instead of $2.13/hr, since there were no tips to make up the difference.
posted by ourobouros at 7:25 AM on February 11, 2019 [1 favorite]

So what I'm hearing is "always tip directly and in cash"
posted by Automocar at 7:34 AM on February 11, 2019 [18 favorites]

Always tip directly and in cash, indeed. And in amounts that move the needle in 2019.
posted by salt grass at 7:36 AM on February 11, 2019 [8 favorites]

The thing is, waitstaff and customers know the deal with hourly pay and tips. Whether you like it or not, you know it. People do NOT know the deal with this weird piecework stuff, clearly, as it comes as a shock to many people.

It's even clear that at one point, it DID work like this:

Before the shift, Instacart drivers would get a base rate plus a fixed fee for every item in the order, and the totality of any tip the customer added.

Which is what you expect.

The complaint alleges that Instacart “intentionally and maliciously misappropriated gratuities in order to pay plaintiff’s wages even though Instacart maintained that 100 percent of customer tips went directly to shoppers. Based on this representation, Instacart knew customers would believe their tips were being given to shoppers in addition to wages, not to supplement wages entirely.”

If I order from Instacart and I pay a $25 dollar fee for a delivery, I expect the delivery person to get paid the same amount from Instacart whether I tip $0 or $20.
posted by jeather at 7:41 AM on February 11, 2019 [8 favorites]

I would not see the cash tip as morally clean in this equation

At this point I care a lot less about being morally clean and more about doing something immediate that can help someone eat or pay their rent right now, today.
posted by poffin boffin at 7:49 AM on February 11, 2019 [21 favorites]

Thing is, at a restaurant a lot of your tip is making it to the worker. It's rare for servers to make so little in tips that their employer is paying them up to the minimum, and on a busy shift they're well
over by pretty early on in the night and then the rest is all theirs. For something like Instacart, you'd have to tip over $10 on a delivery for any of it to make it to the delivery person, no matter how busy their shift is. And when's the last time you tipped over $10 for a delivery? I was raised to tip $2 for a pizza, and nowadays I tip more like $5, but I don't think I've ever tipped $10.

With Instacart, a $5 tip is a $0 tip. A $10 tip is a $0 tip. A $15 tip is a $5 tip. The company takes the first $10 of every single tip and just pockets it.

That's fucked.
posted by Anticipation Of A New Lover's Arrival, The at 7:49 AM on February 11, 2019 [23 favorites]

I HAAAAAAAAAAAATE tipping culture

That's a bit of a derail IMHO. I hate tipping culture too, but this article is about wage theft. So let's keep calling out Instacart, DoorDash, Amazon. (Ideally wage theft would be punished by jail time the same as other theft, but that's not the way this country works, so in the mean time remember the names of these corporations and boycott them.)

And yes, I know some restaurant owners steal tips too; call them out and boycott them too.
posted by splitpeasoup at 7:58 AM on February 11, 2019 [3 favorites]

at least as long as we're permitted to have cash, which I don't expect will be too much longer
There is a proposed bill in Philadelphia to fine businesses $2,000 for not accepting cash. Here's hoping it passes.
posted by soelo at 8:02 AM on February 11, 2019 [4 favorites]

I never tip on the app. If I'm using Uber/Lyft etc I always make sure I have some cash to tip after good service and if possible I leave a cash tip in restaurants too.
posted by ShakeyJake at 8:22 AM on February 11, 2019 [2 favorites]

Personally I frequently don't even have cash.
posted by Anticipation Of A New Lover's Arrival, The at 8:29 AM on February 11, 2019 [1 favorite]

WeWork sells overpriced shared office space with "amenities" for startups and freelancers...Separately, they have a company called WeLive, which offers dorms with "amenities", often right next to the WeWork offices. And they have plans to offer some kind of banking services, and private schools.

So, the return of the company town, but on a "neighborhood" level? Great.
posted by Thorzdad at 8:30 AM on February 11, 2019

It's a kind of tragedy of the commons. Maybe 'tyranny of the commons' would be more apt.
posted by ZeusHumms at 8:31 AM on February 11, 2019

Can someone explain to me how the "new policy" described in the Eater article is any different from the old policy? Is "including tips" a typo for "excluding tips"?

Going forward, Instacart shoppers will receive a minimum of $10 per order — including tips — and the platform will make up the difference if a tip isn’t high enough to surpass the $10 threshold. The company also plans to raise its minimum payment from $3 to between $7 and $10 depending on the region.

posted by lazuli at 8:33 AM on February 11, 2019 [1 favorite]

At this point I care a lot less about being morally clean and more about doing something immediate that can help someone eat or pay their rent right now, today

Sure, me too. For my family that means we don’t eat out and we make a food bank donation instead (which has issues too!) I’m all for team get people money and food.
posted by warriorqueen at 8:39 AM on February 11, 2019 [2 favorites]

Lazuli, that Eater article has some bad editing—NYT says that tips will, indeed, be seperate.
posted by Rube R. Nekker at 9:06 AM on February 11, 2019 [1 favorite]

ourobouros, the difference from restaurants, and the fraud that's going on here, is that these delivery companies are explicitly telling customers that 100% of their tip goes to the delivery person. So the customer believes that the person is getting a total of (BASE PAY + TIP). However, in reality the companies are using the tip as part of the base pay and just paying the remaining difference, so the person is just receiving BASE PAY (and possibly a tip if the tip is greater than the base pay, but that's almost certainly not going to happen).

As you say, this is often how restaurants work, but here customers were directly told otherwise.
posted by Sangermaine at 9:15 AM on February 11, 2019

I use DoorDash way more than I should. What are my alternatives in Atlanta? Or just use DoorDash, tip the lowest amount possible on the app and then tip in cash? Like, does the driver know ahead of time what the tip is? Do I have to explain each time I get a meal that "hey, I'm not stiffing you via the app, I just want to pay you in cash"? Maybe I should get a card made that I hand out with the tip.
posted by snwod at 9:24 AM on February 11, 2019

Personally I frequently don't even have cash.

Me neither. And when I do the smaller denominations are often reserved for people I can't tip digitally. Uber drivers here often want to practice their English; this will make a nice topic.
posted by Tell Me No Lies at 9:28 AM on February 11, 2019

Thanks, Rube R. Nekker. That makes more sense.

I do think these practices are different than what happens with restaurant waitstaff. If a waiter works for an hour and makes $2.13 in base pay plus $10 in tips, then they earn $12.13. The restaurant doesn't take away the base pay. If they make $2 in tips, then the restaurant is supposed to pay out extra to get the waiter up to minimum wage.

The old model for Instacart said that if the driver got $10 in tips, they'd make $10; Instacart wouldn't pay them anything.
posted by lazuli at 9:32 AM on February 11, 2019 [3 favorites]

Uber drivers here often want to practice their English; this will make a nice topic.

You want to talk about tipping practices with your Uber drivers? Please don't, that seems like it'd be really uncomfortable for them.
posted by rue72 at 9:38 AM on February 11, 2019 [2 favorites]

The tip credit detail is irrelevant anyways, because neither Washington nor California are tip-credit states. The premise is faulty from the start. A waiter doesn't get $2.15 + tips, they get either $16 + tips or $12 + $3 towards medical + tips (large vs small business).

Given where these companies are based, they have no reason to apply this faulty concept to avoid paying workers properly.
posted by CrystalDave at 9:47 AM on February 11, 2019 [3 favorites]

I hate cash, never carry it, but now I make a point to have a couple of bills on me because I know I'm going to use Lyft or Caviar sooner or later. It is do-able.
posted by salt grass at 9:48 AM on February 11, 2019 [1 favorite]

Instacart aren't applying the tip credit concept because their drivers are not employees and they don't receive a base salary. When there are no deliveries, drivers make nothing, not even a measly $2.13/hour. In the meantime, they are putting wear and tear on their personal vehicles.

And how likely is it for a tip to be above $10, so the driver will ever see any of the money for tips? This is WAY more evil than tip credits.
posted by subdee at 10:12 AM on February 11, 2019 [4 favorites]

...the absolute view of labour costs, especially front-line labour costs, as the place you ruthlessly prune every dollar.

This is at least partially an accounting problem. Companies that have big factories and a lot of expensive equipment carry all of it on their balance sheet as long-term assets. It makes sense because it's stuff they own that has a reasonably well known enough value. That then influences the company's perceived credit worthiness and valuation targets and such.

But if your primary asset is people you can't put a dollar value on it. Smart companies know that their employees and their institutional knowledge has value and will take some steps to reduce turnover (which is kind of like figuring out more effective/efficient ways of maintaining manufacturing equipment) and more generally view their employees as assets in which they invest. But the more direct incentive is to treat every employee as an expense and attempt to reduce all expenses. It's dumb and short-sited but on the spectrum of all companies, half of them are dumber and more short-sited than the rest and the employees suffer for it long before the company does.

If we could figure out a way to put some kind of realistic value on employees capitalism would likely run it's course and at least mitigate the problem a little.

Sometimes the problem isn't really "capitalism" in general but that it hasn't been properly...channeled I guess.
posted by VTX at 10:41 AM on February 11, 2019

Costco uses instacart for 2hr grocery deliveries. Just before this story broke, I ordered $85 in groceries from them, with tip it was about $100. How disappointing that this sort of bullshit gets pulled. I would not have tipped had I known. I'm glad they've been shamed into changing this policy.
posted by evilDoug at 10:44 AM on February 11, 2019

I don't know how all of these services work, but when I was driving for Postmates we were forbidden to take cash tips. Forbidden, as in, thrown off the platform if it was discovered we took a cash tip.
posted by queensissy at 11:11 AM on February 11, 2019 [5 favorites]

The thing about labor is that it's extremely expensive relative to materials equipment, most of the time. I was just looking at two types of RJ45 plugs for CAT V cables. For a pack of 50, you're looking at a $35 price increase for Type 2 vs. Type 1, about a 250% premium. However, if it takes an electrician five minutes less per plug to wire the Type 2 plugs, that's a net savings of around $350 over the course of the pack.

Labor is expensive. You don't have to have much exposure to a company's books to realize that payroll is usually the single greatest expense, by a huge margin. That even goes for companies that run warehouses and truck fleets and build stuff. Labor is the lion's share of the cost.

Doesn't make it right to screw your employees, but there's a real pressure driving it.
posted by Anticipation Of A New Lover's Arrival, The at 11:45 AM on February 11, 2019 [2 favorites]

Guys i knew we where getting the 80s cyperpunk dystopia I just thought we’d have cooler clothes
posted by The Whelk at 12:36 PM on February 11, 2019 [5 favorites]

Last year Republicans passed and Trump signed an amendment to the Fair Labor Standards Act that now allows restaurant owners to confiscate all server tips and then dole them out as they see fit to augment minimum wage salaries for the back of house workers that are not servers. Under Obama rules owners were required to pay back of house workers out of their own pockets.
posted by JackFlash at 1:02 PM on February 11, 2019 [3 favorites]

>> Uber drivers here often want to practice their English; this will make a nice topic.
>
> You want to talk about tipping practices with your Uber drivers?
> Please don't, that seems like it'd be really uncomfortable for them

Tipping practices as in "How much should I tip you?" No. Tipping practices such as "Is it better to tip you in cash or use the App?" Absolutely. I’m not sure why they would be embarrassed, but I’m sure they’ll get over it.
posted by Tell Me No Lies at 1:19 PM on February 11, 2019

I use instacart for our Costco runs. It was mere chance and luck that I was tipping in cash, but now I will definitely continue to do so, and never use the app to tip. Thanks for the heads up on this, MetaFilter!
posted by WalkerWestridge at 2:59 PM on February 11, 2019

Sharing some notes from the Instacart trenches, as someone who is good friends with a couple shoppers in my area:

The $10 minimum tip-absorbing pay policy has only been around for a few months (in our area, anyway). Prior to that, orders with only a few items could pay as little as $5 if the customer left no tip. Base delivery commission would vary slightly by arcane metrics but start around $4 plus $.40 per unique item. An order with 12 kinds of baby food is great because they’re small and right next to each other, but another order could ask for a dozen two liter bottles of Mountain Dew - that’s 1 item of 12 units, so it’s only $.40 to the shopper to haul it all to your door.

Jimmy Johns locations were abusing the shit out of this. Folks I know were paid less than $8 from Instacart to deliver 300lb+ of produce to Jimmy Johns locations on multiple occasions. No tip naturally. Keep in mind these shoppers are used to family grocery shopping, and if they do have their own dollies/folding carts/safety gear it is only coming out of their own pocket, usually after winding up in pain or a nasty situation.

payment still works about this way but now every order ensures a minimum $10 payment, which makes smaller orders worth about as much as a 15-item order. afaik tip-eating only occurred on these small orders (less than ~15 items). If base comission + item comission + tip is less than $10, Instacart paid the difference. The new policy announced will change that to leave the tip out of the calculation and add it on after.

The $10 minimum rollout came along with other changes including previews of the order (so now a shopper can spot those high-unit bulky/heavy items in the batch and decide whether they’re prepared to actually deal with it) as well as a breakdown in pay, also showing the comitted tip if there is one.
posted by luftmensch at 7:25 PM on February 11, 2019 [5 favorites]

So when you tip them… they don't actually get it. The company takes the tip, and the worker's net pay remains the same

Anyone know whether Grubhub drivers get the tips?
posted by JenMarie at 7:41 AM on February 12, 2019

Ugh, doordash just started a massive ad campaign in DC and it makes me want to smash things.
posted by aspersioncast at 6:19 AM on February 13, 2019