Dive Brief:
- DoorDash will pay $16.75 million to settle a lawsuit filed by New York Attorney General Letitia James alleging that the delivery company used workers’ tips to subsidize their base pay, according to a news release issued Feb. 24 by the office.
- From May 2017 to September 2019, DoorDash kept from customers that the "tip" they added to the delivery charge would not be separated from delivery workers' guaranteed base income, the AG’s office alleged. Instead, “DoorDash would guarantee pay to a delivery worker, and then only actually pay them whatever the tip did not cover,” per the release.
- The settlement will be distributed to an estimated 63,000 delivery workers in New York who worked for DoorDash during the relevant period, the release said.
Dive Insight:
Under the settlement, DoorDash also agreed to use a pay model that ensures workers receive tips in their entirety without an impact on their guaranteed pay; transparently share pay policy details with workers and consumers, including providing a breakdown of base pay, promotional bonuses and tips to delivery workers for every delivery; and provide workers access to their delivery history for at least four years, the release said.
“DoorDash misled customers who generously tipped and deceived Dashers who deserved to be paid in full. This settlement returns millions to the pockets of hardworking Dashers and ensures transparency in DoorDash’s payment practices going forward,” James said.
DoorDash said the settlement involves a pay model that is no longer used and that the company has since made significant changes to its pay model.
“We remain committed to making sure that Dasher earnings are always fair and transparent, and the allegations settled were related to an old pay model that was retired in 2019. To be clear: Dashers always keep 100% of tips from orders on the DoorDash app,” a company spokesperson said in an emailed statement. “While we believe that our practices properly represented how Dashers were paid during this period, we are pleased to have resolved this years-old matter and look forward to continuing to offer a flexible way for millions of people to reach their financial goals.”
DoorDash, along with delivery companies Grubhub and Uber Eats, previously sued New York City in 2023 over a rule setting minimum hourly pay floors for delivery drivers.
