New York City fines DoorDash $131 million over driver tip violations

<p>New York City Mayor Zohran Mamdani criticized DoorDash CEO Tony Xu for promoting a "greedy algorithm" during a news conference where he announced a $131 million settlement with DoorDash. The settlement stems from allegations that the company withheld delivery driver tips.</p><p>Mamdani referenced remarks made by Xu on a podcast in July, where Xu advised business owners to utilize a greedy algorithm to maximize profits. Mamdani explained that a greedy algorithm optimizes short-term outcomes without considering long-term consequences, stating that New York City and its delivery workers have faced the negative impacts of such a business model.</p><p>During the announcement, Mamdani revealed that the $131.5 million settlement is the largest ever secured for food delivery workers in American municipal history. Of this amount, $115 million will be returned to delivery workers, with some potentially receiving up to $5,000. The remaining funds will be allocated to fines and the development of software that enables delivery workers to document their payments and share data with the city.</p><p>Mamdani highlighted that this settlement empowers workers to crowdsource data and investigate the algorithms that influence their pay and schedules. Additionally, DoorDash will be required to submit delivery worker payment data to the city regularly for three years.</p><p>DoorDash acknowledged the underpayment of workers, describing it as unintentional. In a statement, the company said, "Simply put, we screwed up. While these mistakes weren’t intentional, that doesn’t make them okay. We pride ourselves on operational excellence at DoorDash – and this was not excellent, nor was it acceptable. Dashers should be paid in full, on time, every time. We are sorry to the Dashers we let down." However, Mamdani contended that the alleged misconduct was deliberate, noting that DoorDash failed to account for all hours worked by delivery workers.</p><p>This announcement is part of Mamdani's broader efforts to address issues within the food delivery industry. Earlier this year, he announced a $5 million settlement with a group of companies, including Uber Eats, for failing to pay drivers minimum wage, and secured an $875,000 settlement with HungryPanda for charging illegal fees.</p>