DoorDash ordered to repay $16 million in misused tips

New York Attorney General Letitia James has announced a $16.75 million settlement with DoorDash after an investigation found that the company misled both customers and delivery workers by using tips to subsidize base pay instead of giving them directly to workers.

“Delivery workers are integral to our communities,” said James. “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.”

James' office discovered that between May 2017 and September 2019, DoorDash operated under a deceptive pay model, which allowed the company to use customer tips to offset workers' guaranteed earnings rather than adding them to their pay. An additional $1 million will also be allocated for administrative costs to distribute payments.

What happened?

DoorDash’s guaranteed pay model allowed Dashers to see their expected earnings before accepting deliveries. However, the investigation revealed that:

• Dashers only received their full tip if it exceeded the guaranteed pay amount.
• If a customer tipped less than the guaranteed amount, DoorDash reduced its own contribution to pay.
• Customers were misled into believing their full tip went directly to Dashers, when in reality, it was being used to cover part of DoorDash’s pre-set payment amount.

For example, if a Dasher was guaranteed $10 for a delivery:

• If a customer tipped $6, DoorDash only contributed $4, meaning the Dasher still received only $10.
• If a customer tipped $9, DoorDash only contributed $1, keeping its labor costs lower.
• If a customer tipped $0, DoorDash covered the full $10 amount.

Despite telling customers that “Dashers will always receive 100 percent of the tip,” the company failed to clearly disclose how tips were actually used. Customers had no way of knowing that their tips were reducing DoorDash’s costs rather than adding to a Dasher’s pay.

Who Is eligible

Any New York-based DoorDash driver who completed deliveries between May 2017 and September 2019 may be eligible to file a claim. In total, approximately 63,000 delivery workers could receive restitution. Over 11 million DoorDash orders were placed in New York during the affected period.

• Payments will begin in early 2025.
• A settlement administrator will contact eligible Dashers via mail, email, and text with instructions on how to file a claim.
• The exact payout per Dasher will depend on the number of claims filed.