New York Attorney General Letitia James has secured a $16.75 million settlement from food delivery app DoorDash. The company must now compensate over 60,000 delivery workers after allegedly using customer tips to cover base wages. Some workers may receive up to $14,000 in unpaid earnings from the settlement.
NY Attorney General Wins Landmark Settlement for Delivery Workers
Attorney General Letitia James announced the settlement during a February 24 news conference. The agreement follows an investigation into DoorDash’s payment practices between May 2017 and September 2019.
“Customers had no reason to believe that these tips were being used by DoorDash to reduce its costs,” James stated. She described the company’s actions as “fundamentally unfair” and misleading to both customers and workers.
DoorDash’s Controversial Tipping Policy Affected Millions of Orders
DoorDash allegedly guaranteed delivery workers a base pay for each delivery. However, the company failed to factor in tips properly. Instead, the company used customer tips to offset worker wages.
The investigation revealed that eleven million orders were placed through DoorDash during the period covered in the settlement. The deceptive practice ended in 2019, but James emphasized that the company had “misled their customers and shortchanged the very people who made their business model possible.”
Workers to Receive Up to $14,000 in Compensation
The settlement will provide financial relief to tens of thousands of New York-based delivery workers. Each eligible worker could receive up to $14,000 in compensation.
Attorney General James will oversee the distribution of funds. Her office plans to contact potential beneficiaries and set up a website. This resource will help delivery workers learn more about applying for their share of the settlement money.
Delivery Workers Celebrate Victory for Labor Rights
William Medina, a delivery worker and member of the Worker Justice Project’s Los Deliveristas Unidos, celebrated the settlement. He called it a recognition of “our humanity, our labor and our dignity.”
“We proved that we are not just numbers on their platform,” Medina said at the news conference. “We are a powerful, essential workforce.” This sentiment reflects growing activism among gig workers demanding fair treatment.
DoorDash Responds While AG James Continues Consumer Advocacy
DoorDash maintains that their “practices properly represented how Dashers were paid during this period.” Nevertheless, the company stated they are “pleased to have resolved this years-old matter.”
Meanwhile, Attorney General James has established herself as a champion for New York consumers. She has pursued several other high-profile cases, including a lawsuit against SiriusXM Radio. That case accused the company of intentionally making subscription cancellations difficult. James continues her mission to protect citizens from what she sees as unfair business practices.
