Attorney General Letitia James unveiled on Monday a massive DoorDash settlement resulting from an alleged tip scheme that led to wages stolen from delivery workers.
According to James, the food delivery company misled customers by pocketing tips intended for the delivery workers racing around the city and added those funds to the base pay, which was already meant to have been guaranteed to the worker. Between May 2017 and September 2019, the AG’s office said, DoorDash used a guaranteed pay model that let Dashers see how much they would be paid before accepting a delivery. An Attorney General investigation found that DoorDash used customer tips to offset the base pay it had already promised workers, instead of giving them the full tips they earned.
For example, if a customer tipped $0, DoorDash would pay $10 ($1 + $9 remainder). The Dasher received $10. But if a customer tipped $3, DoorDash would pay $7 ($1 + $6 remainder). The Dasher still only received $10 and nothing additional.
“Delivery workers are integral to our communities, working tirelessly to bring food and other essentials directly to our doorsteps in all conditions,” James said. “DoorDash misled customers who generously tipped and deceived Dashers who deserved to be paid in full. This settlement returns millions to the pockets of hardworking Dashers and ensures transparency in DoorDash’s payment practices going forward. My office will continue to protect New York workers from deceptive business practices and ensure they receive all of the money they’ve earned.”
Consequently, James says DoorDash agreed to pay $16.75 million in restitution to dashers who delivered for the company between May 2017 and September 2019. Additionally, DoorDash will be required to ensure all tips are paid to Dashers in their entirety.
“$16.75 million is a valuable lesson. In addition to that, we will monitor and they will issue compliance reports to our office every six months for the next three years. In addition to that, they will disclose payment details to both Dashers, to the workers, and also a breakdown of their pay,” James said.
Ligia Guallpa, co-founder of Los Deliveristas Unidos, an organization that advocates for app-based delivery workers, says that while this is a major victory for a primarily immigrant employee base, it also represents the lengths that companies will go to in order to steal from their vulnerable workers.
“This settlement shows the scale at which DoorDash steals from its workers and the scale at which it lies,” Guallpa said. “Today, New York City sees what we’re up against and how much more work there is to do to fight back against the predatory labor practices that this industry is built on.”
James’ office reports that approximately 63,000 New York delivery workers stand to benefit from this settlement. Payments are expected to begin in early 2025.
DoorDash responded by underscoring that the company has not used that pay model in over half a decade and that they look forward to continuing working with their dashers.
“We remain committed to making sure that Dasher earnings are always fair and transparent, and the allegations settled were related to an old pay model that was retired in 2019. To be clear: Dashers always keep 100% of tips from orders on the DoorDash app,” a DoorDash spokesperson 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.”
Read More: https://www.amny.com/business/
