DoorDash has agreed to pay $16.75 million to settle an investigation by New York authorities into its pay practices between 2017 and 2019.
The probe, led by New York Attorney General Letitia James, found the delivery platform used customer tips to cover workers’ base pay, rather than passing the tips directly to workers as promised.
How DoorDash’s Pay Model Worked
From May 2017 to September 2019, DoorDash used a guaranteed pay model that showed delivery workers, known as Dashers, how much they would earn before accepting a job.
- Workers were guaranteed a minimum pay amount for each delivery.
- If customers left tips, DoorDash used those tips to reduce the amount the company had to pay.
- This meant tips didn’t always increase workers’ earnings — they simply reduced DoorDash’s contribution to the guaranteed pay.
For example, if a delivery came with a $10 guaranteed payment and the customer tipped $3, the worker would still receive only $10. In cases where customers tipped nothing, DoorDash covered the full guaranteed pay.
Customers Misled About Tipping
At the time, DoorDash’s app encouraged tipping at checkout, telling customers that 100% of tips would go directly to the delivery worker.
The investigation revealed this was misleading, as tips were effectively used to lower DoorDash’s costs instead of boosting worker earnings.
Settlement Details
Under the settlement terms:
- DoorDash will pay $16.75 million in restitution to affected workers.
- Up to $1 million will be set aside for administrative costs to distribute payments.
- About 63,000 New York Dashers could receive compensation, with some payouts reaching as high as $14,000 per worker.
This settlement follows similar cases in other regions. In 2020, DoorDash paid $2.5 million in Washington, D.C., and in 2024, it settled for $11.25 million in Illinois over similar pay practices.
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Worker Reactions
Lee Vaughn, a DoorDash driver since 2016, said:
“I have been delivering for DoorDash since they started, but I do not work for them as much any more because the system was not clear and they were taking our tips.“DoorDash never told us accurate distances, and the payment amount they would promise was not always true. They would show us an amount plus tips, but they were not telling us the truth. We worked hard and we deserve to be paid.”
DoorDash’s Response
DoorDash addressed the settlement in a statement:
“We remain committed to making sure that Dasher earnings are always fair and transparent, and the allegations settled were related to an old pay model that was retired in 2019.
“To be clear: Dashers always keep 100% of tips from orders on the DoorDash app. While we believe that our practices properly represented how Dashers were paid during this period, we are pleased to have resolved this years-old matter and look forward to continuing to offer a flexible way for millions of people to reach their financial goals.”
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What’s Next for DoorDash Pay Practices?
Attorney General Letitia James made it clear her office will continue holding companies accountable for misleading workers and customers.
She said:
“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.”
With gig economy companies under increasing scrutiny, this case highlights how platforms will need to balance transparency, fair pay, and customer trust in the future.”
