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Update, February 7, 2019: Responding to criticism from drivers, Instacart has updated its compensation policies. In part, those changes mean tips added by customers will always go directly to drivers on top of Instacart’s contribution to driver pay.


Original story, February 4, 2019:

If you order delivery through services like Instacart or DoorDash and tip on top of the cost of your order of paper towels, dog food, and ramen, you’d expect that tip to be paid directly to the driver, right? Say your order comes to $25, and you tip the driver $4, one would reasonably assume that’s $4 more the driver makes on top of their regular pay. But, according to an NBC News report, that’s not always how your tip is applied.


Both Instacart and DoorDash changed their compensation policies within the past two years, allowing the companies to use a customer’s tip to pay a delivery driver’s base rate. 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. Now, Instacart pays drivers a “batch payment,” a base amount that takes into account how many items are in the order, how heavy/bulky they are, etc. The driver also earns mileage payments and potentially a sort of surge pricing during busy times. All of that together must come to $10 minimum payment to the driver per order. Under new rules, if the batch payment plus other compensation doesn’t come to $10, Instacart can use part or all of a customer’s tip to bring the payment to $10. As NBC News summarizes it, “Only once the $10 minimum is reached does the tip amount start to boost the worker’s take-home pay.” DoorDash’s new policy operates similarly.

“We’re constantly reviewing and evaluating feedback from our shopper community to ensure they’re competitively compensated for the work they’re doing on behalf of our customers. While our national average shopper earnings is at more than $15 per hour worked, today we are introducing a [$3] minimum order payment from Instacart to prevent some of the extreme edge cases we’ve seen recently. Extreme edge cases are very rare, but even one edge case is too many,” David Hahn, Instacart chief product officer said in a statement to The Takeout.

Tipping rules and other policies have made Instacart the defendant in a new class-action lawsuit filed by its delivery drivers last week. Both DoorDash and Instacart say drivers receive all of customers’ tips, but critics argue that customers expect their tips to be applied on top of a driver’s base pay, not to directly fund that base pay. The ins and outs of each company’s regulations are complex, so it’s worth giving the full NBC News report a read.