DoorDash to pay $131.5m over underpaid New York delivery workers

DoorDash has agreed to pay $131.5m to resolve a New York City investigation into claims that the company underpaid delivery workers or delayed their wages. Mayor Zohran Mamdani described the settlement as the largest labor enforcement action in the city's history.

The deal comes nearly eight months after the city's Department of Consumer and Worker Protection accused both DoorDash and rival Uber Eats of using "design tricks" that deprived workers of more than $550m in tips.

Payouts and penalty

Under the settlement, DoorDash will distribute nearly $115m to roughly 264,000 workers, known as Dashers, with a median payment of about $48. The company also accepted a $16.7m civil fine.

Of the total relief, $83m addresses a dispute over how pay should be calculated for workers who were logged into the app but not actively making deliveries. A further $12.3m covers payments that were missing or arrived days or weeks late.

DoorDash acknowledged the errors in a statement, saying many stemmed from deliveries crossing city boundaries, orders with multiple pickup or drop-off points, partially fulfilled or canceled deliveries, technical bugs, and incomplete banking details for workers. The company said the underlying technical issues have since been fixed.

DoorDash also agreed to submit detailed monthly pay data to the city for the next three years.

Background

At a press conference, Mamdani said DoorDash's use of algorithms had, for years, failed to count all hours worked by delivery drivers, calling it more than a rounding error. City officials would not say whether Uber Eats and Grubhub are complying with the 2023 city law requiring improved pay for delivery workers. Uber declined to comment, and Grubhub did not respond to requests for comment. DoorDash shares rose 0.2% in afternoon trading following the announcement.