NEW YORK—The ubiquitous food delivery app DoorDash will pay almost $17 million to settle claims that it unfairly used customer tips to subsidize the wages of its delivery workers in New York, rather than letting drivers keep the tips on top of their guaranteed pay, Attorney General Letitia James said Monday.
James said DoorDash used the wage model between May 2017 and September 2019. The company would guarantee workers a base payment for each delivery but was factoring tips into that equation, only paying workers for whatever the tips didn’t cover, according to the attorney general.
DoorDash also did not make it clear to customers that their tips were being used to offset worker wages, said James, a Democrat.
“This is just fundamentally unfair,” she said at a news conference in Manhattan. ”Customers had no reason to believe that these tips were being used by DoorDash to reduce its costs.”
The company will pay $16.75 million in restitution that will be distributed to DoorDash workers who made deliveries between May 2017 and September 2019 in New York. Eligible workers will be contacted by a settlement administrator.
In a statement, DoorDash said, “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.”
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The company said the old pay model is no longer in use.
