Online delivery platform DoorDash has reached a settlement of around $17m with the New York Attorney General’s office after allegations of misappropriating tips intended for its delivery workers.
The platform, based in San Francisco, US, is accused of using customer tips to subsidise the base pay of its drivers, known as Dashers, between May 2017 and September 2019.
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New York Attorney General Letitia James announced the settlement, stating that DoorDash misled consumers and delivery workers by not giving Dashers the full tips they earned.
According to court documents, the company misrepresented how tips contributed by customers would be allocated to the drivers.
James stated in a news conference in Manhattan: “This is just fundamentally unfair.
“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.”
A DoorDash spokesperson was quoted by USA TODAY: “The company remains committed to making sure that Dasher earnings are always fair and transparent.
“The allegations settled were related to an old pay model that was retired in 2019. 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.”
DoorDash will implement a clear disclosure on its mobile application, providing Dashers with detailed information about their potential earnings before they accept a delivery order, ensuring transparency regarding how tips will be handled.
James added: “Delivery workers are integral to our communities, working tirelessly to bring food and other essentials directly to our doorsteps in all conditions. This settlement returns millions to the pockets of hardworking Dashers and ensures transparency in DoorDash’s payment practices going forward.”
Further details will shortly be released on how eligible delivery workers can claim their share of the settlement funds.
Attorney General James indicated that an administrator would establish a website to facilitate the claims process.
Delivery workers who served as Dashers in New York between 2017 and 2019 may be entitled to restitution under the terms of the settlement.
