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DoorDash to pay New York delivery workers nearly $17M for using tips to subsidize wages
DASHDoorDash(DASH) Fox Business·2025-02-25 09:21

Core Points - DoorDash will pay nearly 17millioninasettlementforusingcustomertipstosubsidizedeliveryworkers′wagesinsteadofallowingthemtokeepthefulltips[1][5]−TheNewYorkAttorneyGeneralcriticizedDoorDash′spracticesasfundamentallyunfair,statingthatcustomersweremisledabouthowtheirtipswereused[1][7]−Thesettlementincludes17 million in a settlement for using customer tips to subsidize delivery workers' wages instead of allowing them to keep the full tips [1][5] - The New York Attorney General criticized DoorDash's practices as fundamentally unfair, stating that customers were misled about how their tips were used [1][7] - The settlement includes 16.75 million in restitution for eligible DoorDash workers who made deliveries between May 2017 and September 2019 in New York [5][7] Payment Model - Under the previous pay model, DoorDash guaranteed a minimum payment to delivery workers but used customer tips to offset this guaranteed amount [2][4] - For example, if a customer tipped 11onanorderwithaguaranteedamountof11 on an order with a guaranteed amount of 10, the Dasher would only receive 12insteadofthefulltip[4]−Thismodelhassincebeendiscontinued,andDoorDashisnowrequiredtoensurethattipsarepaidinfulltoDasherswithoutaffectingthecompany′sguaranteedpaycontributions[8][7]SettlementDetails−Thesettlementwilldistributerestitutiontoaffectedworkers,andDoorDashwillalsocoverupto12 instead of the full tip [4] - This model has since been discontinued, and DoorDash is now required to ensure that tips are paid in full to Dashers without affecting the company's guaranteed pay contributions [8][7] Settlement Details - The settlement will distribute restitution to affected workers, and DoorDash will also cover up to 1 million in settlement administration costs [5][7] - DoorDash must disclose its pay policy details to both Dashers and customers moving forward to ensure transparency [7]