DoorDash has agreed to pay nearly $17 million to settle claims that it unfairly used customer tips to help cover the wages of its delivery drivers in New York, instead of allowing the drivers to keep the tips on top of their guaranteed pay, New York Attorney General Letitia James announced.
According to James, DoorDash used this payment model between May 2017 and September 2019. The company would guarantee drivers a base pay for each delivery but would factor in tips as part of that base pay, only making up the difference if the tips didn’t cover the base amount.
What’s worse, DoorDash didn’t make it clear to customers that their tips were being used to subsidize worker wages, James said. “This is just fundamentally unfair,” she said during a news conference in Manhattan. “Customers had no reason to believe that these tips were being used by DoorDash to reduce its costs.”
As part of the settlement, DoorDash will pay $16.75 million in restitution, which will be distributed to eligible delivery workers who worked between May 2017 and September 2019 in New York. Those workers will be contacted by a settlement administrator.
DoorDash issued a statement saying, “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.”
The company also confirmed that the pay model in question is no longer in use.
