New York Attorney General Letitia James has announced a landmark $16.75 million settlement against DoorDash for systematic tip fraud, impacting tens of thousands of delivery workers in the state. The investigation revealed that DoorDash siphoned off customer tips intended for drivers and used them to offset the guaranteed pay promised to its workforce.
Between May 2017 and September 2019, DoorDash operated a deceptive pay model where tips were not paid out in full to Dashers. Instead, the company used these funds to fill in gaps in the base pay it guaranteed, often leaving workers with less than they were promised for their hard work.
Attorney General James emphasized the importance of delivering justice to the Dashers who were taken advantage of by DoorDash’s deceptive practices. “Delivery workers are integral to our communities, working tirelessly to bring food and other essentials directly to our doorsteps in all conditions,” she said. “DoorDash misled customers who generously tipped and deceived Dashers who deserved to be paid in full.”
The investigation found that under DoorDash’s model, when a customer’s tip exceeded the guaranteed pay amount, the Dasher received no additional payment for the extra tip. For example, on an order with a $10 guarantee, if a customer tipped $11, the Dasher would still only receive $10, despite earning $1 in tips.
DoorDash failed to disclose these practices prominently, leading customers to believe that their tips were going directly to Dashers. Customers were encouraged to tip at checkout with a misleading message stating “Dashers will always receive 100 percent of the tip,” while the reality was obscured in fine print online documents.
The settlement administrator appointed by the Office of the Attorney General (OAG) will distribute the restitution to eligible Dashers who worked for DoorDash during the specified period. With more than 60,000 New York delivery workers potentially benefiting from this settlement, payments are expected to begin early in 2025. This case underscores the state’s commitment to protecting workers and ensuring fair business practices.
RELATED: DoorDash Workers Urged to Claim $16.75M Settlement by AG James
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Key Facts
- State: New York
- Agency: NY AG
- Category: Fraud & Financial Crimes|White Collar Crime|Organized Crime
- Source: Official Source ↗
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