New York’s Top Prosecutor Settles with DoorDash over Misuse of Tips
New York, March 2023:
Background
DoorDash, a leading online delivery platform, has been found to have misled both consumers and delivery workers by using tips intended for its drivers to subsidize their pay. This practice occurred between May 2017 and September 2019.
Investigation and Settlement
Following an investigation by the New York Attorney General’s office, a nearly $17 million settlement has been reached between the state and DoorDash. The investigation revealed that DoorDash:
- Pocketed tips intended for delivery workers (Dashers)
- Added the funds to the drivers’ base pay instead of providing them the full tips they earned
- Misled customers into believing that their tips were going directly to the drivers
Statement by New York Attorney General
"This is just fundamentally unfair," said New York Attorney General Letitia James. "Customers had no reason to believe that these tips were being used by DoorDash to reduce its costs…They knew it wasn’t right and they did it anyway."
DoorDash’s Response
A DoorDash spokesperson stated that the company remains committed to fair and transparent earnings for its Dashers. They acknowledged the allegations but emphasized that they were related to an old pay model that was retired in 2019.
Settlement Terms
Under the settlement, DoorDash will:
- Provide Dashers with an accessible disclosure explaining the pay structure before accepting delivery orders
- Establish a fund to compensate Dashers for the misappropriated tips
Compensation for Dashers
In the coming weeks, the Attorney General’s office will provide information on how eligible delivery workers can file a claim for restitution. If you were a Dasher or delivery worker in New York between 2017 and 2019, you may be entitled to payment.
Attorney General James’ Statement
"Delivery workers are integral to our communities, working tirelessly to bring food and other essentials directly to our doorsteps in all conditions," James said. "This settlement returns millions to the pockets of hardworking Dashers and ensures transparency in DoorDash’s payment practices going forward."
Next Steps
The Attorney General’s office will establish a website with details on the claims process. All eligible delivery workers are urged to file a claim to receive their rightful compensation.
Key Points
- DoorDash misled consumers and delivery workers by using tips to subsidize driver pay.
- A $17 million settlement has been reached between New York and DoorDash.
- Dashers who worked in New York between 2017 and 2019 may be entitled to restitution.
- DoorDash has committed to fair and transparent earnings practices going forward.
