DoorDash Settles With NYC for $131M Over Underpaid Delivery Worker Tips
The food delivery giant acknowledged "mistakes" that led to workers being paid late or not at all, agreeing to compensate drivers and pay city fines.
DoorDash has reached a $131 million settlement with New York City to resolve a legal dispute over underpaid tips to delivery workers. The agreement concludes a legal battle between City Hall and the food delivery company.
The settlement stems from a report by the city's Department of Consumer and Worker Protection, which alleged that DoorDash and Uber Eats had deprived delivery workers of over $550 million due to their tipping systems. DoorDash officials acknowledged that errors occurred, stating, "Our mistakes meant some Dashers were underpaid or paid late."
"While these mistakes weren’t intentional, that doesn’t make them okay," the company said in a statement. "Dashers should be paid in full, on time, every time. We are sorry to the Dashers we let down."
According to the city's January report, the average tip per order for DoorDash and Uber Eats delivery workers reportedly fell from $3.66 to 93 cents in the week after new regulations took effect, eventually dropping further to 76 cents per delivery.
New York City law requires food delivery apps to provide customers with an option to tip drivers at checkout, with a default of 10% of the order cost. The settlement addresses issues that arose after these tipping systems were implemented alongside inflation-adjusted pay increases for delivery workers, which consumer protection officials claimed led to delayed or absent payments.
DoorDash indicated that the settlement affects less than 1% of its delivery workforce in the city, with approximately 264,000 "Dashers" eligible for compensation. The company stated that about $6.6 million in payments were never delivered to drivers, and an additional $5.7 million was paid out late. The average underpaid amount per worker was reported to be $7.70, with a median of $48.
The settlement includes $12.3 million designated for Dashers who were underpaid or paid late. Another $83 million will resolve a dispute concerning the calculation of pay for time drivers spend online between deliveries. The remainder of the funds will be used to cover city fines.
DoorDash attributed the errors to various factors, including technical issues, complex deliveries crossing city boundaries or involving multiple locations, partial fulfillments, or cancellations. In some instances, errors were also linked to incomplete or inaccurate banking information provided by Dashers.