New York City Fines DoorDash $131 Million for Underpaying Delivery Drivers

New York City has reached a $131.5 million settlement with DoorDash after an investigation found the company systematically underpaid its delivery drivers. The settlement, announced by New York City Mayor Zohran Mamdani, is the largest of its kind for food delivery workers in American municipal history.

Of the total settlement amount, $115 million will be distributed directly to delivery workers who were underpaid. Some drivers could receive up to $5,000. The remaining funds will cover fines and the development of new software. This software is intended to empower delivery workers to record their work data, including hours and pay, and share it with the city, providing greater transparency into the algorithms that dictate their schedules and earnings.

Mamdani criticized DoorDash CEO Tony Xu's previous remarks about embracing a "greedy algorithm" as a business strategy. "In computer science, a greedy algorithm is one that makes the most optimized, best short term outcome choice at every step and never weighs the consequences," Mamdani explained at a press conference. "New York City and the tens of thousands of delivery workers who call our city home have reckoned with greed as a business model for far too long."

DoorDash acknowledged the underpayments, characterizing them as unintentional mistakes. In a statement obtained by the Associated Press, the company said, "Simply put, we screwed up. While these mistakes weren’t intentional, that doesn’t make them okay. We pride ourselves on operational excellence at DoorDash – and this was not excellent, nor was it acceptable. Dashers should be paid in full, on time, every time. We are sorry to the Dashers we let down."

However, Mamdani disputed the notion that the underpayments were accidental, stating that DoorDash "failed to count every hour worked by delivery workers" and excluded time from canceled trips or trips crossing city limits after the city began enforcing a minimum pay rate for delivery workers in 2023.

Under the terms of the settlement, DoorDash will be required to submit delivery worker payment data to the city for a period of three years. The company will also be subject to regular audits.

This settlement follows previous actions by Mamdani's office against other delivery companies. In January, his administration secured a $5 million settlement with Uber Eats for failing to pay drivers minimum wage. In April, HungryPanda agreed to an $875,000 settlement over allegations of charging businesses illegal junk fees.