Obligating platforms to pay tips

The US experience

In February 2025, US delivery services Amazon and DoorDash must pay fines for failing to tip their delivery drivers.

Back in 2019, the Federal Trade Commission (FTC) began investigating Amazon over drivers' complaints about pay wages. The Amazon Flex delivery service promised drivers earnings of $18 to $25 per hour, as well as a full tip credit. As of 2016. Amazon decided to reduce driver labor costs and lowered pay below what was promised. The rate was generated by an algorithm based on the amount of tips so that tips would cover the promised minimum hourly rate. Amazon provided drivers' total earnings information - a single amount with no separation between the minimum wage rate and tips.

That is, Amazon promised to pay 100% of the tips that customers left for delivery drivers, but in fact about one-third of the tips went to reduce Amazon's labor costs - to subsidize the drivers' hourly wage rates. In other words, these payments were not additional wages for the drivers. The FTC ordered Amazon to refund the¹ drivers $61 mn. Amazon will now pay another $3.95 mn to the District of Columbia for deceiving consumers who thought their tips were being used as additional earnings for the driver.

A similar scheme was used by DoorDash delivery, which introduced a “guaranteed payment” scheme by using tips intended for Dashers to subsidize their guaranteed pay. Before a courier accepted a delivery order, DoorDash specified a minimum amount of earnings. So, if the delivery was $10 and the customer left a $2 tip, the driver still received $10 ($8 was the hourly rate from DoorDash). And even if the customer left a $9 tip, DoorDash would then only pay $1, bringing the payment to the minimum rate of $10. As a result, in February, DoorDash signed an agreement with New York City to reimburse $16.75 mn in tips to 63,000 drivers for handling more than 11 mn orders.

Russia’s experience

There is no regulation in Russia on the distribution of tips, including on platforms. If hiring is carried out under an employment contract, in accordance with a Letter from the² Ministry of Finance, tips (for waiters) are considered income in the form of a gift and are not subject to personal income tax if transferred by an individual directly to a waiter.

And if tips are transferred to an organization, such income is no longer considered to be a gift. At the same time, the Ministry of Finance emphasizes that in this case, an employer may deduct remuneration (commission) for accepting tips under an agency contract. If the above approach is applied to platforms, then, for example, taxi companies operating through platforms are entitled to charge a commission for payment from drivers' tips.

If a person works on a platform under a civil law contract, platforms may charge a commission on tips, acting as agents or commissioners.

Meanwhile, the experience of foreign countries (EU, USA, France) establishes special obligations for platforms to pay tips and inform about their exact amount.

From the monitoring issue No. 2 (14), February 2025. Download the full issue (PDF) · issue page at the Gaidar Institute