Point Pickup, a delivery contractor used by Walmart and other major retailers, has started dipping into customers’ tips to cover guaranteed pay for its gig workers, according to screenshots of the app and receipts obtained by Motherboard.
Before recent changes to the app, gig workers on the Point Pickup platform were shown a payout amount alongside their delivery offers. Tips were processed later and paid out separately.
But in late October, Point Pickup drivers noticed that the company had begun to include tips in their payout amount. Now when a customer tips, Point Pickup uses a portion of the customers’ tip toward its workers’ guaranteed pay, according to screenshots obtained by Motherboard.
“A week ago we got tips plus what they offered us,” a driver in central Wisconsin told Motherboard. “Now they’re being sneaky and using our tips in their offer.”
Point Pickup doesn’t have the same name recognition as gig economy companies such as Uber, DoorDash, or Instacart, but it has a giant national network of more than 350,000 drivers in the United States who ferry products from major retailers such as Walmart, Kroger, and other grocery stores to customers’ homes. As independent contractors, they do not receive overtime pay, minimum wage guarantees, healthcare benefits, or reimbursement for costs accrued on the job.
The news about Point Pickup using tips toward workers’ wages comes days after the Federal Trade Commission sent a notice to many of the most high-profile gig economy companies in the United States, warning them that it will aggressively pursue companies that advertise false money-making opportunities on their apps.
Point Pickup isn’t the first gig economy platform to use tips to supplement gig workers’ earnings. In 2019, the Los Angeles Times reported that Amazon was using tips toward promised pay for its Amazon Flex delivery drivers. Amazon is currently paying out $61.7 million to more than 140,000 Amazon drivers in reimbursement for tips it withheld between 2016 and 2019, according to a Federal Trade Commission investigation. DoorDash and Instacart have also come under scrutiny from workers, customers and the government for using tips to subsidize pay for gig workers, and issued apologies to their customers and workers. Last year, DoorDash agreed to pay $2.5 million to settle a tip theft lawsuit.
Under the new pay model, if Point Pickup offers a guaranteed payment of $12.32 for an order, part of that will be paid for by the customer’s tip. This makes it, essentially, part of their base pay rather than an actual tip. In this example, if Point Pickup guarantees $12.32 and the customer tips $5.00, Point Pickup could use that $5.00 to subsidize nearly half of the drivers’ pay, according to a recent screenshot of a payout. In such a case, the driver could earn slightly more, $13.51, on that order with Point Pickup only paying $8.51 of the drivers’ wages. (This example is based on a real payout; Motherboard slightly changed the cents in the order to protect the identity of the source who filled the order.)
In cases where customers tip the most generously, Point Pickup now pays a mere fraction of a drivers guaranteed earnings. On the flip side, when customer tips are meager, Point Pickup still pays the majority of workers earnings.
After Motherboard reached out to Point Pickup for comment, the company announced that it updated the app on November 8 to show that “guaranteed payouts” now include pay base, extra pay, and tips, and published a “clarifier” on what is included in extra pay.
A spokesperson told Motherboard that the company had recently begun “publishing a guaranteed rate prior to drivers accepting orders (includes base rate + projected extra pay).”
“Drivers were confusing the guaranteed rate for the fixed base rate (just a portion of the guaranteed rate),” she continued. “The confusion led drivers to believe that we were taking some of their tips. This is not true. DRIVERS HAVE ALWAYS RECEIVED AND WILL CONTINUE TO RECEIVE 100% OF THEIR TIPS.”
The Point Pickup statement omits the fact that Point Pickup has always shown drivers an expected payout before they expect an order. But recently, company changed the name from “payout” to “guaranteed payout,” and began supplementing tips toward that payout.
These recent changes to Point Pickup’s pay model have resulted in a precipitous drop in driver pay, several drivers told Motherboard, and widespread backlash against the company from drivers on Facebook groups dedicated to the app.
“I am a widowed mother of a 22-year-old disabled daughter,” a Point Pickup driver in Azle, Texas told Motherboard. “This is my full time job. I depend on it. I was flabbergasted when they made this change because I love what I do. There’s been a dramatic drop in my earnings of at least $400 [per week].”
On a private Facebook group with 8,500 members, called “Point Pickup Drivers,” gig workers have written in recent days about losing hundreds of dollars in pay each week, and feeling as though they have to quit the app.
“Do YOU order from Walmart delivery?? I want CUSTOMERS to be informed about what is going on,” one driver wrote. “This is NOT okay, No company should be using YOUR tips to a driver to justify docking their pay.”
“Drivers beware,” another driver posted in the Facebook group. “They are stealing our tips. This is unacceptable…My husband and I are honest seniors looking for supplemental income. We refuse to work for $7 an hour after taxes and gas and car wear and tear.”
Point Pickup also partners with Kroger, Albertsons, Publix, GameStop, Sam’s Club, and Giant Eagle, but not all partners allow tipping, a spokesperson said. Point Pickup would not disclose which of its partners had disabled tipping, but drivers told Motherboard that Walmart uses tipping.
Walmart did not respond to a request for comment.
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