DoorDash To Fork Over $16.75M For Cheating Delivery Workers Out Of Tips

In a landmark settlement, New York's Attorney General announced that DoorDash has agreed to pay more than 60,000 DoorDash drivers nearly $17 million in stolen tips. Over a two-year period between 2017 and 2019, DoorDash misled its customers and delivery workers (i.e. Dashers) by using tips meant for Dashers to offset their guaranteed pay. It's believed that similar DoorDash deception still occurs in other states, so will this settlement snowball to Dashers elsewhere?

Between May 2017 and September 2019, DoorDash created a guaranteed pay model that allowed Dashers to see how much they would get paid before accepting any job. However, investigation by the New York Office of the Attorney General (OAG) uncovered the deceptive way in which DoorDash used customer tips to cover the base pay. During this period, delivery workers were only able to see their tips earned only IF they were greater than the guaranteed upon pay.

It was found that DoorDash would always fork out a minimum of $1 to Dashers and would use whatever tips from the customer to cover the guaranteed amount. Say, if an order had a guaranteed $10 base pay:

• If a customer tipped $0, DoorDash would pay $10 ($1 + $9 remainder). The Dasher received $10.
• If a customer tipped $6, DoorDash would pay $4 ($1 + $3 remainder). The Dasher still only received $10.
• If the customer tipped $11, DoorDash would pay $1 ($1 + $0 remainder).The Dasher only received $12.

DoorDash could've saved its skin by being transparent about what's happening in the background, but disclosures and up-front messaging for customers and Dashers were buried deep in online fine print rather during the ordering process. Customers were assured that "Dashers will always receive 100 percent of the tip," but didn't clearly explain how the tip/base pay breakdown works.

The result of this investigation brings a belated but positive result to some 60,000 New York Dashers. DoorDash has agreed to pay $16.75 million in tips plus $1 million for administrative costs. The company will also be required to revise payment practices, enhance pay policy transparency to Dashers and customers, and improve access to delivery history going back at least four years. New York Attorney General Letitia James commented, "This settlement returns millions to the pockets of hardworking Dashers and ensures transparency in DoorDash’s payment practices going forward."