DoorDash is paying millions of dollars to New York City delivery workers — and admitting that it messed up.
The delivery company will pay $131.5 million to settle the city's investigation into its pay practices, DoorDash said on Tuesday.
New York City's Department of Consumer and Worker Protection had been investigating whether DoorDash complied with a 2023 minimum pay law for delivery workers.
"Simply put, we screwed up," DoorDash said in a statement. "Our mistakes meant some Dashers were underpaid or paid late." The pay mistakes were not intentional, DoorDash said.
The settlement marks another win for New York City as it takes on apps including Uber Eats and DoorDash.
In January, the City started enforcing a law requiring the apps to offer customers the option to tip delivery workers when ordering food, resulting in millions more in tips for delivery workers. Two years earlier, the apps had moved the tipping option to appear only after a delivery arrived.
Mayor Zohran Mamdani said in July that the tip crackdown was "only the beginning."
As a result of Tuesday's settlement, 264,000 Dashers will get a payment. DoorDash never paid about $6.6 million worth of compensation, the company said, while it paid another $5.7 million "days or in some cases, weeks late," it said.
The average payment owed to Dashers was $7.70, DoorDash said. Most workers who were affected — 65% — were underpaid by less than $1, the company added. The median payment will be around $48.
Under the settlement, Dashers who were underpaid will get "a minimum of $10, even if they were underpaid by less than that," DoorDash said.
A majority of the settlement — $83 million — will resolve a disagreement about "on-call time," or the minutes that delivery workers spend on the app waiting to accept an order. New York City law requires companies to pay workers for this time.
DoorDash said that it paid workers for this time using a calculation that it said was "fair, practical, and legal."
"But rather than spend years fighting over whose method was right, we chose to pay Dashers sooner and use the City's method going forward," the company said.
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Alex Bitter is a senior retail reporter covering the gig economy, food, and retail. His work focuses major gig delivery and ride-hailing apps, including Uber, Lyft, DoorDash, Instacart, and Walmart's Spark. He is interested in everything from what it's like to work on the apps to the companies' business strategies.Some of his recent stories feature gig workers who have been deactivated on the apps, DoorDash hiring traditional employees to make deliveries, gig workers' use of bots, and gig work expanding into new professions, such as nursing.Alex has also written about Aldi's US expansion, Starbucks' turnaround efforts, and the fallout from Kraft-Heinz's budget cutting. Convenience store chain Sheetz ended its "smile policy" after his reporting.Before joining Insider in September 2020, he wrote about consumer and retail companies for S&P Global Market Intelligence. He's a graduate of the University of Hawai'i at Mānoa and grew up on the Big Island.Alex lives in the Washington, DC, area, where you can find him studying ancient coins or searching for Civil War artifacts with his metal detector in his free time.Got a tip? Reach out at [email protected] or via encrypted messaging app Signal at +1 (808) 854-4501.
