NEW YORK (BLOOMBERG) -- DoorDash Inc., the leading food-delivery firm in the US, said it agreed to a $131.5 million settlement with New York City to resolve a probe into its compliance with minimum-pay rules for couriers.
The settlement, announced Tuesday, includes more than $83 million to resolve a disagreement over how to calculate pay for time that the workers spend online between deliveries, a requirement under the city’s rules. $12.3 million will go toward couriers who were underpaid or paid late due to invalid bank information on their accounts. DoorDash is also paying $16.7 million in fines to the city’s Department of Consumer and Worker Protection, which enforces the pay rule.
About 264,000 workers will receive compensation, DoorDash said, including 209,000 for missing or late payments. The average missing payment owed is $7.70, and while 65% of the affected couriers were underpaid by $1 or less, DoorDash said it will pay all affected couriers a minimum of $10. The median settlement will be around $48.
The move is the latest example of the hard-line approach taken by Mayor Zohran Mamdani’s administration to scrutinize the labor practices of gig economy apps. Sam Levine, the commissioner of the DCWP, said over the weekend that his department is hiring “a lot more” data scientists to help build cases against predatory corporations and practices.
“New York City’s delivery workers are showing that opaque algorithms will not have the final word when it comes to how much they are paid for the hard work they do,” Levine said in an emailed statement.
At the heart of the disagreement is the city’s minimum-pay rule, which went into effect in 2023 after an appeals court rejected efforts by DoorDash, Uber Technologies Inc. and Grubhub to block it. The rule requires companies to pay couriers a base wage of $22.13 per hour, multiplied by the sum of all workers’ total delivery trip time and time spent waiting between orders.
Specifically, DoorDash disagreed with the regulator on how that idle time should be compensated for workers who are located outside the city limits — say, in New Jersey or Long Island — but available to fulfill orders within the five boroughs.
“We screwed up, and our mistakes meant some NYC Dashers were underpaid or paid late. We’re making things right by paying every Dasher what they’re owed and fixing what caused this,” DoorDash said in a statement.
Years of Pushback
After the pay rule was implemented in 2023, DoorDash and Uber passed on costs to consumers in the form of added fees. And, in an attempt to reduce sticker shock, they moved the tipping prompt in their apps so that customers didn’t see it until after they placed their orders.
As a result, customers tipped couriers 64% less and paid about 45% more in fees per delivery order, according to Bloomberg’s analysis of 2024 data that delivery apps submitted to the DCWP.
The Mamdani administration blasted DoorDash and Uber on the interface changes, saying such practices deprived couriers $550 million in tips.
The city has since enacted new tipping rules, which require the apps to make the tipping option available at the time of checkout and set to at least 10%. That policy went into effect in January after the two companies failed to block it in court.
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