NY DoorDash deliverers, allegedly stiffed on tips, to share $17M settlement

DoorDash has agreed to pay nearly $17 million to settle claims it shorted thousands of delivery workers out of tip money paid by customers, New York Attorney General Letitia James announced Monday.

Some 60,000 deliverers in New York state, which the company refers to as "Dashers," will receive payouts ranging from $10 to $14,000, under the $16.75 million settlement ending what James called the delivery app’s “deceptive” pay practices.

“That will go a long way toward addressing the suffering that they've dealt with, and their families,” James said in a Monday afternoon press conference.

DoorDash spokesperson Eli Scheinholtz said the settlement was related to “an old pay model” that existed from 2017 to 2019 and has since been retired. The settlement included no admission of wrongdoing.

“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,” Scheinholtz said in a statement.

The DoorDash settlement is only the latest involving delivery workers, who are often immigrants who may be reluctant to press claims because of their immigration status, according to advocates.

In December, James' office announced the recovery of $4 million in withheld tips to former Drizly alcohol-delivery workers. In November 2023, the office recovered $328 million for Uber and Lyft drivers to settle wage claims.

According to the attorney general, DoorDash “misled” customers into believing their tips would directly go to delivery workers. Instead, James’ office explained in a release, the company operated a “guaranteed” wage system where it used tips from customers to “offset” the sum guaranteed and paid by the company to the worker.

For instance, if a customer didn't tip on an order with a guaranteed amount of $10, the company would pay the delivery worker $10. Similarly, if the customer provided a $9 tip, the company would still only pay the worker $10.

“ They would guarantee pay to a delivery worker and then only actually pay them whatever the tip did not cover,” James said. “And this is just fundamentally unfair.”

Ligia Guallpa, the executive director of the Worker’s Justice Project, an advocacy group, hailed the settlement as a “major victory” for delivery workers, putting money “ into the pockets of hardworking deliveristas whose income was stolen by DoorDash.”

The agreement covers any worker who delivered for DoorDash between May 2017 and September 2019 in New York state. During that period, New Yorkers placed more than 11 million delivery orders with DoorDash, according to James' office.

All told, approximately 63,000 delivery workers stand to benefit, with payments expected to begin in early 2025.

Eligible drivers will be contacted by the settlement administrator via mail, email and/or text with notices of the settlement and information on how to file a claim, according to James' office.