DoorDash will pay $17 million to resolve allegations it used customer tips to offset delivery worker wages in New York between 2017 and 2019, state officials announced Monday. Attorney General Letitia James revealed the food delivery giant counted gratuities toward workers' guaranteed pay instead of adding them as bonuses.
The controversial practice meant a $10 base pay + $5 tip became $10 total compensation instead of $15.
Customers had no reason to believe DoorDash used their tips to reduce company costs,James stated at a Manhattan press conference. Over 30,000 workers may receive restitution from the $16.75 million settlement fund.
Key details for affected workers:
- Eligibility: Delivered in NY between May 2017-September 2019
- Payouts: Automatically distributed via settlement administrator
- Deadline: No claim filing required
DoorDash maintains its historical pay model complied with labor laws but agreed to settle this years-old matter.The company emphasized its current payment system separates tips from base wages, a policy changed in 2019 following public backlash.
This case highlights ongoing debates about gig worker protections. Unlike traditional employees, delivery drivers typically lack minimum wage guarantees and benefits. The settlement comes as states increasingly scrutinize app-based companies' labor practices – California passed Proposition 22 in 2020, while Massachusetts faces similar legislative battles.
Worker advocacy groups praised the resolution but argue systemic reforms remain necessary. This $17M settlement exposes how platforms exploit tipping systems,said Gig Workers Rising spokesperson Diego Flores. True accountability requires reclassifying workers as employees.
For consumers, the case underscores the importance of transparency in digital tipping. Experts recommend confirming whether services add tips to workers' earnings rather than using them to meet wage obligations.