DoorDash will pay nearly $17 million in a settlement after the company used customer tips to subsidize the wages of its delivery workers in New York instead of allowing them to keep the tips in addition to their guaranteed pay.
“This is just fundamentally unfair,” James, said at a news conference. “Customers had no reason to believe that these tips were being used by DoorDash to reduce its costs.”
Between May 2017 and September 2019, DoorDash used a guaranteed pay model that allowed Dashers to see how much they would be paid before accepting a delivery, but the company included customer tips to offset the base pay it guaranteed to workers, rather than pay the full tip amount, according to James.
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New York, which also worked with Illinois and DC on the probe, gained access to communications among DoorDash executives who worried that their Dashers would “figure out” what was going on, James told reporters. “DoorDash executives knew how deceptive this policy was,” she said. “They knew it wasn’t right, but they did it anyway.”
For example, if Dashers were offered a guaranteed amount of $15 for a delivery, and the customer didn’t tip, DoorDash would pay the Dasher the promised $15. But if the customer tipped $5, then DoorDash would let the Dasher keep that tip and pay only $10 out of its own corporate coffers.
The settlement will be split among some 60,000 delivery workers known as “Dashers” and will range from $10 to $14,000 per worker, Attorney General Letitia James said Monday.
