DoorDash Ordered To Pay $16.75M For Withholding Tips From NYC Delivery Workers
New York City is home to over 60,000 app-based food delivery drivers. It was also the first US city to offer app-based food delivery drivers minimum wage — a precedent that followed years of complaints from underpaid workers. Shortly before NYC established the minimum wage, DoorDash announced its hourly pay system “Earn By Time,” which some argue pays less than the original model depending on your location. Now DoorDash is in hot water with the city of New York over reportedly cheating delivery workers out of tips.
On Monday, February 23, New York Attorney General Letitia James announced a $16.75 million settlement with DoorDash after an investigation found that it was misleading Dashers and customers. Between May 2017 and September 2019, DoorDash used tips meant for Dashers to subsidize its guaranteed pay model, which gives an order’s total before it’s accepted. Rather than paying Dashers the full tips they had earned, DoorDash used this model to offset the base pay.
For years, @DoorDash cheated its delivery workers by using customers' tips to meet its workers’ guaranteed pay instead of giving them the tips they earned.
— NY AG James (@NewYorkStateAG) February 24, 2025
Today, we're making DoorDash pay $16.75 million that will go back into the pockets of tens of thousands of workers. pic.twitter.com/hkVsSMBlGV
AG James provided an example of how DoorDash deceptively used the guaranteed pay model. For orders with a guaranteed amount of $10:
- If a customer tipped $0, DoorDash would pay $10 ($1 + $9 remainder). The Dasher received $10.
- If a customer tipped $3, DoorDash would pay $7 ($1 + $6 remainder). The Dasher still only received $10.
- If a customer tipped $6, DoorDash would pay $4 ($1 + $3 remainder). The Dasher still only received $10.
- If a customer tipped $9, DoorDash would pay $1 ($1 + $0 remainder). The Dasher still only received $10.
Basically, DoorDash would only allow Dashers to see their tips if they exceeded the total amount already guaranteed.
“Delivery workers are integral to our communities, working tirelessly to bring food and other essentials directly to our doorsteps in all conditions,” said AG James in a press release. “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.”
In addition to the $16.75 million in restitution for Dashers, DoorDash must pay an additional $1 million to help administer the payments. Ironically, the news comes just a year after DoorDash named New York City one of six major cities the best for its delivery drivers.
