DoorDash to pay $131.5 million settlement for underpayment of New York workers

DoorDash has agreed to pay a $131.5 million settlement to New York City regulators after admitting to failing to compensate thousands of workers correctly or on time. DoorDash stated, "Simply put, we screwed up. Our mistakes meant some Dashers were underpaid or paid late." The agreement with the Department of Consumer and Worker Protection follows a city investigation into wage violations, particularly regarding how DoorDash calculates compensation for the time delivery drivers spend waiting for orders. The settlement is part of an ongoing conflict between gig economy platforms and municipal leaders. Companies like Uber Eats and Grubhub have faced similar disputes with city officials over tipping laws, minimum wages, and data-sharing requirements. The majority of DoorDash's settlement, $83 million, addresses disagreements over how to calculate pay for the time workers spend online between deliveries. Traditionally, apps have only compensated drivers during active deliveries, but New York's rules require payment for all time logged into the app. DoorDash attributed the issues to "complex" changes to the minimum wage in New York state introduced in 2023, which established varying wages based on county, tipping, and the number of workers employed. The company also cited technical glitches and multi-stop delivery routes as factors leading to underpayment or delayed wages. DoorDash noted that while these mistakes were not intentional, they were still unacceptable. The company reported that local workers earn approximately $30 per active hour on average and that it has resolved the software bugs responsible for the errors. The issues affected around 264,000 workers, but DoorDash insisted that they impacted less than 1% of overall local transactions. Systemic errors resulted in approximately $6.6 million in wages not reaching workers at all, with another $5.7 million being paid late.