Settlement Agreement

DoorDash Reaches Agreement with New York Attorney General

DoorDash has come to a settlement with the New York Attorney General regarding a past practice where the company utilized customer tips to subsidize its drivers’ pay. According to the office of New York AG Letitia James, an investigation revealed that from May 2017 to September 2019, DoorDash failed to pass on tips from customers to its drivers through the app. As a result, the company will provide $16.75 million in restitution, which will be distributed among approximately 63,000 drivers. The Attorney General informed The New York Times that while many drivers will receive payments in the low thousands, some drivers may receive as much as $14,000.

DoorDash’s Past Practices

During the specified two-year period, DoorDash guaranteed its drivers a minimum payment for each delivery. When customers checked out an order, they were shown a message stating: "Dashers will always receive 100 percent of the tip." This message led most customers to believe that their tip would be added to the driver’s payment. However, DoorDash used these tips to cover the guaranteed pay for drivers. For example, if a customer tipped $6 for an order with a guaranteed payment of $10, DoorDash would only contribute $4 from its own funds. Consequently, the driver would receive only $10 instead of the expected $16.

Settlement and Statement

According to James, "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." DoorDash previously settled a similar lawsuit in Washington, DC for $2.5 million in 2020. Additionally, the company resolved another lawsuit of the same nature in Illinois last year for $11.25 million.

New Regulations

DoorDash discontinued its unfair tipping practices in 2019. In New York, app-based delivery companies are now required to pay their drivers a minimum wage, currently set to $19.56 per hour, excluding customer tips.