DoorDash to settle New York lawsuit over misleading tipping practices by paying $17 million

DoorDash has reached an agreement with the New York Attorney General over an old practice wherein the company used customers' tips to subsidize its drivers' pay. As the office of New York AG Letitia James explained, its investigation had revealed that DoorDash wasn't giving its drivers the tips customers sent them through the app from May 2017 through September 2019. Now, the company will pay $16.75 million in restitution that will be divided between 63,000 drivers. The Attorney General told The New York Times that a lot of drivers will receive payments in the low thousands, but some will get as much as $14,000. 

Within the two-year period mentioned above, the service promised Dashers a guaranteed pay for each delivery. When customers checked out an order, they saw a message that said: "Dashers will always receive 100 percent of the tip." Most customers reading that would take it as their driver will get what they were tipping them on top of their payment. Instead, the service used their tips to cover the drivers' guaranteed pay. If a customer tipped $6 for an order with a guaranteed payment of $10, for instance, DoorDash would only pay $4 out of its own pocket. That means the driver would still only get $10 instead of $16.

"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 said in a statement. In 2020, DoorDash also settled a similar lawsuit in Washington, DC for $2.5 million. It settled another lawsuit of the same nature in Illinois last year for $11.25 million. 

The company ended its unfair tipping practices in 2019. In New York, app-based delivery companies are now required to pay their drivers a minimum wage that's currently set to $19.56 per hour, not including the tips they get from customers. 

This article originally appeared on Engadget at https://www.engadget.com/apps/doordash-to-settle-new-york-lawsuit-over-misleading-tipping-practices-by-paying-17-million-143018965.html?src=rss https://www.engadget.com/apps/doordash-to-settle-new-york-lawsuit-over-misleading-tipping-practices-by-paying-17-million-143018965.html?src=rss
Created 1mo | Feb 25, 2025, 3:20:22 PM


Login to add comment

Other posts in this group

Samsung's Galaxy Tab S10 FE and Galaxy Tab S10 FE+ will be available on April 10

Samsung is releasing two Fan Edition models of the

Apr 2, 2025, 2:10:16 PM | Engadget
Wikipedia is struggling with voracious AI bot crawlers

Wikimedia has seen a 50 percent increase in bandwidth used

Apr 2, 2025, 2:10:15 PM | Engadget
A four-pack of Apple AirTags is back on sale for $68

Whether you attach it to a dog's collar, put in on a set of keys or throw it in your purse, there's no denying that AirTags save you a lot of hassle. They get rid of the mental stress that is, "Whe

Apr 2, 2025, 2:10:14 PM | Engadget
How to watch today's Switch 2 Nintendo Direct

The wait is finally over: The appropriately titled "Nintendo Direct: Switch 2" presentation will start today (April 2) at 9AM ET / 6AM PT, and will stream on

Apr 2, 2025, 2:10:13 PM | Engadget
Audi's refreshed RS e-tron GT Performance brings shocking speed for a premium price

The 2025 Audi e-tron GT RS Performance has a special way of welcoming you. As you approach, it does the usual show of blinking headlights and tail lights, plus puddle lamps projecting red RS logos

Apr 2, 2025, 2:10:12 PM | Engadget