DoorDash has agreed to pay $16.8 million to thousands of delivery workers in New York after being accused of misusing customer tips.
The settlement, reached with the New York Attorney General’s office, will compensate around 63,000 workers who were affected by the company’s past payment system between 2017 and 2019.
During this period, DoorDash had a “guaranteed pay” system, which promised workers a minimum payment per delivery. However, instead of adding customer tips on top of their pay, the company used those tips to cover part of the guaranteed amount. For example, if a delivery had a guaranteed payment of $10 and the customer tipped $6, DoorDash would only pay $4 instead of the full amount separately. This meant that workers did not always receive the extra money customers intended for them. The practice was exposed in 2019, leading to strong criticism from both workers and customers, and the company eventually changed its policy.
As part of the settlement, DoorDash will also pay $1 million in administrative costs to help distribute the payments. Some workers will receive several thousand dollars, with the highest payouts reaching $14,000, according to the Attorney General’s office. DoorDash has faced similar legal actions in other states, including Illinois, where it paid $11.3 million, and Washington, D.C., where it settled for $2.5 million.
The Attorney General’s office accused DoorDash of misleading both workers and customers. While the company claimed that 100% of tips went to workers, it was using them to reduce its wage payments. Many customers were unaware of this because the information was hidden in the app. DoorDash has also faced lawsuits from Chicago, which sued the company in 2021 over unfair fees and tipping practices. That case is still ongoing.
