DoorDash Agrees to $131.5 Million Settlement in New York Underpayment Case

DoorDash has agreed to pay $131.5 million to settle a New York City government investigation that found the food delivery giant underpaid workers or delayed their pay.

The settlement, announced by Mayor Zohran Mamdani, represents the city’s largest labor enforcement action to date. It reinforces New York’s ongoing efforts to enforce a 2023 law designed to ensure fair compensation for delivery workers.

The agreement comes roughly eight months after the city’s Department of Consumer and Worker Protection accused DoorDash and its rival Uber Eats of using “design tricks” to deprive workers of over $550 million in tips.

Under the terms of the settlement, DoorDash will distribute nearly $115 million in relief to approximately 264,000 workers, known as Dashers, with a median payout of about $48. The company also accepted a $16.7 million civil fine.

“Simply put, we screwed up,” DoorDash said in a statement. “Our mistakes meant some Dashers were underpaid or paid late. While these mistakes weren’t intentional, that doesn’t make them OK.”

Shares of DoorDash rose by 0.2% in afternoon trading following the announcement.

The payout includes $83 million to resolve a dispute over how pay was calculated for workers who were logged into the app but not actively delivering. Another $12.3 million addresses missed or delayed payments.

As part of the agreement, DoorDash will also submit detailed monthly pay reports to the city for the next three years.

At a press conference, Mayor Mamdani described the settlement as part of a broader commitment to hold delivery companies accountable. He criticized the company’s use of “greedy algorithms” that failed to comply with the 2023 city law.

“For years, DoorDash failed to count every hour worked by delivery workers,” Mamdani stated. “This was not a rounding error or an accidental mistake.”

City officials declined to comment on whether other platforms, including Uber Eats and Grubhub, are in compliance with the 2023 law. Uber declined to offer a statement, while Grubhub did not immediately respond to requests for comment.

DoorDash attributed many of the errors to complex deliveries that crossed city boundaries, involved multiple locations, or were partially fulfilled or canceled. The company also cited technical bugs and incomplete banking information for workers, noting that it has since resolved the underlying technical issues.

DoorDash, Uber Eats, and Grubhub have engaged in numerous legal battles with New York City, including disputes over tipping laws and data sharing requirements with restaurants.

Source link