DoorDash reaches $131.5M settlement with NYC over courier pay
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The payment issues affected about 264,000 couriers. Photo: Shutterstock
DoorDash has agreed to pay $131.5 million to settle claims that it underpaid or delayed payment to hundreds of thousands of couriers in New York City.
The city’s Department of Consumer and Worker Protection (DCWP) said that an investigation of the company’s payment practices uncovered “systematic violations” of the city’s minimum wage rules for delivery workers that went into effect in 2023.
The third-party delivery company on Tuesday said it made mistakes while trying to comply with those rules, which it described as the most complex in the country. It blamed technical bugs or complicated situations, such as deliveries that crossed city boundaries, and said the payment errors were not intentional.
“Simply put, we screwed up,” the company said in a statement.
The payment issues affected about 264,000 drivers, about 209,000 of which where never paid or were paid late, the company said. This accounted for less than 1% of payments in the city. About $6.6 million never reached these workers, and another $5.7 million arrived days or weeks late.
The company will pay $12.3 million to those couriers, with a median payout of about $48 per person. All impacted workers will get at least $10, even if they were underpaid by less than that.
DoorDash will pay a much larger sum — about $83 million — to settle a separate issue: workers who were underpaid for time they spent logged into the DoorDash app but not actively delivering.
The company said it calculated pay for this “on-call time” differently than the city and believes its approach was “fair, practical, and legal.” But it has now agreed to use the city’s formula “rather than spend years fighting over whose method was right.”
The company will also pay $16.7 million in fines to the DWCP.
The department said it is the largest worker settlement in New York City history and the largest settlement involving food delivery workers in the U.S.
San Francisco-based DoorDash said it has fixed the bugs that caused the errors and has also strengthened its compliance program to prevent future issues.
As part of the settlement, it will have to submit monthly data reports to the DCWP every month for three years to ensure compliance. The department is also working with Workers Justice Project and the Workers’ Algorithm Observatory to develop software that will allow couriers to share their DoorDash trip data directly with the DCWP.
New York City has among the strictest regulations for food delivery companies in the U.S. and has repeatedly clashed with these companies over its efforts to rein them in.
In 2023, New York enacted a law that required delivery companies to pay workers at least $17.96 per hour spent actively delivering (before tips). The rate has gone up each year and now stands at $22.13.
UPDATE: This story was updated with more information from New York City government.
