Dive Brief:
- DoorDash has agreed to pay $16.75 million to settle a lawsuit regarding its pay practices from 2017 to 2019 brought by New York State Attorney General Letitia James, according to a statement. James’ office estimated upwards of 63,000 workers could be paid as part of the agreement.
- The suit targeted DoorDash’s guaranteed pay model. New York alleged DoorDash would pay a minimum of $1 and use tips to offset guaranteed pay.
- The case is similar to one DoorDash settled for $11.3 million in November 2024 in Illinois.
Dive Insight:
DoorDash, according to court records of the settlement, “does not admit the findings made by the OAG or the alleged violations of law.”
James’ office claimed in the settlement that from 2017 to 2019, if DoorDash guaranteed a worker a specific amount when accepting an order, the worker would make that amount if the tip was less than the pay guarantee. James’ investigation claimed a worker who was tipped $9 dollars on an order guaranteed to make $10 would only be paid $10, rather than the base pay plus the tip. That would be the same amount as a worker guaranteed $10 for an order who was not tipped, meaning the company was using tips to offset labor costs.
“When you steal and lie at this scale, it’s systemic, it’s baked into your business model. And a business model that requires you to steal from workers and customers is a failure,” Ligia Guallpa, the executive director of Worker’s Justice Project and co-founder of Los Deliveristas Unidos, said in a press release.
“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 in a press release.
The settlement includes an agreement that DoorDash will use a pay model that ensures 100% of consumer tips are given to workers and that tips do not have an impact on DoorDash’s contribution to worker pay. DoorDash will be required to disclose its pay model to consumers and workers.
“Dashers always keep 100% of tips from orders on the DoorDash app,” a DoorDash spokesperson wrote in an email to Restaurant Dive.
The spokesperson said the pay model at issue in the Attorney General’s investigation had not been used since 2019.
“We believe that our practices properly represented how Dashers were paid during this period, we are pleased to have resolved this years-old matter,” the DoorDash spokesperson said.
James has managed to obtain other major settlements against gig economy companies, including a $4 million agreement with Drizzly over tipping practices last year and a major $328 million settlement in 2023 with Uber and Lyft over backpay for rideshare drivers.
New York City, aside from the state AG’s efforts, has been at the forefront of delivery regulation, and imposed a $17.96 hourly wage for app-based delivery workers last year that drove a substantial increase in base pay that offset modest drops in the number of workers and in tips.
