In the early days of the food-delivery-app explosion, DoorDash came up with a novel way to process tips customers gave to workers: It effectively kept the money for itself.
The practice, in place for more than two years, eventually led to an outcry. In 2019, DoorDash halted it. But Dashers, as the app’s workers are called, were still out the money that the company had withheld from them.
On Monday, the New York attorney general’s office announced that DoorDash would pay $16.8 million in restitution to Dashers. The money will be spread among as many as 63,000 workers, and though many will receive amounts in the low thousands, some will receive as much as $14,000, said a spokeswoman for Attorney General Letitia James.
DoorDash agreed to similar settlements of $2.5 million in Washington, D.C., in 2020, and $11.25 million in Illinois last year.
This is how the old system worked: If DoorDash guaranteed a worker $7 for delivery and a customer did not tip, DoorDash would pay the worker the whole $7. If the customer tipped, say, $3, then DoorDash would pay the worker only $4, then add on the $3 tip so that the worker would still get just $7.
“Customers had no way of knowing that DoorDash was using tips to reduce its own costs,” the attorney general’s office said in a statement, adding that the fine print about where the tip was actually headed was “buried in online documents.”
At checkout, DoorDash encouraged customers to tip, reminding them, “Dashers will always receive 100 percent of the tip.”
During the time the policy was in effect, New Yorkers placed more than 11 million orders with DoorDash, the attorney general said. At the time, DoorDash paid higher guarantees than some of the other delivery apps, which is why many Dashers still worked for the company despite this policy.
Things have changed a lot for Dashers in New York City since 2019. There was no minimum wage for delivery-app workers then. There has been one since 2023, and it is currently $19.56 — plus tips — per hour spent making deliveries. (The hourly wage does not cover time spent waiting for orders.)
Los Deliveristas Unidos, a labor advocacy group that has fought for fairer pay for delivery workers, applauded the settlement. “Today tastes like victory,” said Ligia Guallpa, the group’s executive director.
DoorDash said in a statement on Monday, “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.”
When asked if the company intended to make restitution to Dashers in any other states, a spokesman replied, “Today we’re just focused on resolving this investigation and putting the allegations on this conduct from years ago behind us.”
A state administrator will contact current and former Dashers who may be entitled to restitution to help them claim it.
The Dashers will be paid a portion of the amount that was improperly withheld from them, but it is not yet clear how large a portion, the attorney general’s office said.
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