DoorDash to pay almost $17 million to settle New York worker tips caseDoorDash to pay almost $17 million to settle New York worker tips case

DoorDash is set to pay $16.75 million in workers’ restitution and up to $1 million in administrative fees, following a legal settlement with the state of New York over owed gratuities to New York Dashers.

According to New York State Attorney General Letitia James, the third-party delivery company is accused of using tips intended for contracted delivery workers to subsidize their guaranteed pay.

The attorney general’s office found that between May 2017 and September 2019, DoorDash engaged in a “deceptive pay model” that let Dashers view how much they would be paid before accepting a delivery. Under this model, James said DoorDash used Dasher tips to offset the base pay guaranteed to workers, stating that DoorDash would also pay the minimum of $1 to the Dasher and then offset the rest of the amount with tips from customers.

“Delivery workers are integral to our communities, working tirelessly to bring food and other essentials directly to our doorsteps in all conditions,” James in a statement. “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.”

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The New York Attorney General’s office announced a similar settlement with Uber and Lyft last month, in which James secured $328 million in back payments for New York Uber and Lyft drivers who were withheld payments and benefits from the rideshare companies.

This pay discrepancy is a result of a DoorDash pay model that is no longer in use. Currently, Dashers earn a guaranteed base pay (based on the estimated time, distance, and desirability of the order) with tips on top of that.

“We remain committed to making sure that Dasher earnings are always fair and transparent, and the allegations settled were related to an old pay model that was retired in 2019,” a DoorDash spokesperson said in a statement. “To be clear: Dashers always keep 100% of tips from orders on the DoorDash app. 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.”

Contact Joanna at [email protected]