DoorDash to Pay $16.8 Million to New York Delivery Workers
Thousands of New York delivery workers will receive payments from DoorDash after a $16.8 million settlement over misused customer tips.
DoorDash has agreed to pay $16.8 million to its New York delivery workers following a settlement with the New York Attorney General’s office. The company used customer tips to supplement base salary payments for employees without proper transparency which led to legal accusations. The settlement represents a major achievement which guarantees that delivery workers will obtain all the tips their customers have provided.
The payout will be distributed among approximately 63,000 New York delivery workers, with some individuals receiving as much as $14,000. The authority of the Attorney General’s office will maintain oversight to guarantee distribution procedures are conducted equitably. The agreement includes $1 million in administrative funding from DoorDash for efficient payment distribution.
How DoorDash Misused Customer Tips
DoorDash utilized a “guaranteed pay” framework from May 2017 through September 2019 to provide incorrect information to its entire customer and worker base. Through this payment structure DoorDash fulfilled minimum compensation promises to workers through customer tips that did not count toward employee base wages.
DoorDash would provide only $4 from the customer tip toward reaching the $10 guaranteed payment for delivery jobs. The company kept any extra tips above the stated amount from customers which meant workers did not receive more compensation from these additional customer-supports. The model received condemnation from the state as deceitful which prompted legal proceedings.
Attorney General’s Investigation and Settlement
New York Attorney General Letitia James investigated DoorDash tipping practices because these practices broke both consumer protection laws and labor rights. The lawsuit argued that DoorDash’s tipping system was not only misleading to customers but also unfair to New York delivery workers who relied on tips for their income.
According to the settlement terms everyone who worked in this employment condition will obtain payment for tips they should have received. Payouts and eligibility determination for affected workers will be handled by the Attorney General’s office while giving special consideration to delivery staff who have been negatively impacted by DoorDash’s deceptive tips.
Previous Settlements and Industry Impact
Customer payments to DoorDash workers have brought ongoing legal scrutiny to the company since its inception. The company paid $11.3 million in settlement to Illinois authorities after facing legal complaints concerning its tipping practices during November 2024. DoorDash issued $2,500,000 in payment to Washington DC in 2020 following an investigation regarding tip appropriation.
The example demonstrates broader problems in the gig economy because companies frequently encounter investigation about pay models and employee protection rights. These settlement proceedings emphasize that delivery platforms need to make their tipping regulations visible and guarantee equitable compensation for their employees.
DoorDash Responds to Tipping Controversy
Due to 2019 customer discontent DoorDash restructured its tipping structure to devote all tips directly to their workers. CEO Tony Xu confirmed DoorDash would modify its policies through feedback received from both customers and workers.
Despite these changes, the New York delivery workers affected by the old model will now receive compensation for the wages they lost due to DoorDash’s past practices. This settlement demonstrates the need for business accountability during the current era of contract work.
