DoorDash Compensates Drivers $17 Million for Misappropriated Tips

DoorDash drivers in New York are set to receive some long-awaited extra money thanks to a recent settlement from the state. Attorney General Letitia James has announced that DoorDash will pay $16.75 million to over 60,000 drivers, known as Dashers, who didn’t receive the tips they were owed. For over five years, DoorDash had used these tips to help pay their drivers’ base wages instead of giving the full amount to the workers.

The issue began with DoorDash’s payment system used from May 2017 to September 2019. During that time, many Dashers believed they were being paid a guaranteed minimum wage for each delivery. However, rather than allowing drivers to keep their tips on top of this guaranteed pay, DoorDash would use these tips as part of the minimum wage. This meant that if a customer left a tip, it effectively reduced the amount DoorDash needed to pay.

To understand how this worked, consider an example. If a driver was guaranteed to earn $10 for a delivery, DoorDash would always pay at least $1. If the customer tipped $5, DoorDash would count that $5 as part of the $10 total. The company would then add just $4 to that, meaning the driver only received $9. In contrast, if the tip was $7, the company would only need to pay $2 to meet the guarantee. It became apparent that the only way for drivers to earn more than the guaranteed $10 was if the customer tipped more than what it took to meet that guarantee. So, if the tip was $11, the driver would receive that extra $1 since it exceeded the minimum amount.

While this payment model seemed misleading, it was even more confusing because DoorDash did not clearly explain it to customers. According to the Attorney General’s lawsuit, DoorDash told customers that “Dashers will always receive 100 percent of the tip.” While this statement is technically correct, it left out crucial information. The term “tip” was used to describe the drivers’ wages, making it unclear to customers that their tips were, in fact, being used to lower DoorDash’s own costs. New York argued that details about the payment structure were hard to find online, which meant customers did not fully understand how tips were being handled.

Finally, in response to this lawsuit, DoorDash changed its payment model to ensure that drivers’ earnings would directly reflect the amount customers decided to tip. Now, drivers will get the full amount of tips given for every order. The settlement marks an important step for drivers to receive the earnings they deserved from the years when DoorDash did not make its pay structure clear.

Eligible Dashers will soon be contacted by the settlement administrator, ensuring they receive their rightful share of the payment. While this resolution took a long time, it is better late than never for these hardworking delivery drivers.