DoorDash settles US$17M case with New York AG over tip misuse allegations

USA – Leading food delivery platform DoorDash has agreed to a US$17 million settlement with the New York Attorney General, following claims that it diverted tips intended for its delivery staff.

the settlement has been reached regarding allegations that the San Francisco–based platform used customer tips to subsidize the base pay of its drivers, known as Dashers, between May 2017 and September 2019.

New York Attorney General Letitia James announced that DoorDash misled both consumers and its delivery workers by failing to pass along the full tip amounts earned by Dashers, instead using these funds to lower its operating costs.

Misrepresentation and Settlement Details

According to court documents, DoorDash misrepresented the allocation of customer tips, giving the impression that these additional funds would go entirely to the drivers.

During a news conference in Manhattan, Attorney General James described the practice as fundamentally unfair, noting that customers had no reason to believe their tips were being used to reduce company expenses.

She asserted that consumers knew the practice was not right, yet continued to tip under those assumptions.

In response, a DoorDash spokesperson told USA TODAY that the company remains committed to ensuring fair and transparent earnings for Dashers.

The spokesperson explained that the allegations pertained to an outdated pay model that was retired in 2019 and expressed satisfaction in resolving the matter, while reaffirming the company’s dedication to providing a flexible means for millions to achieve their financial goals.

Improved Transparency Measures

To prevent future misunderstandings, DoorDash will implement a clear disclosure on its mobile application.

This update will provide Dashers with detailed information regarding their potential earnings before accepting any delivery order, ensuring full transparency on how tips will be handled.

Attorney General James emphasized that delivery workers are integral to communities, diligently bringing food and essentials to doorsteps under challenging conditions.

She stated that the settlement will return millions to hardworking Dashers and guarantee more transparent payment practices moving forward.

Further details on the claims process will be released soon, with an administrator set to launch a dedicated website to facilitate the submission of claims.

Delivery workers who served as Dashers in New York between 2017 and 2019 may be entitled to restitution under the terms of the settlement.

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