DoorDash has agreed to pay US$131.5 million to settle findings that it underpaid New York City delivery workers, paid them late or failed to pay them for completed work.
The settlement, announced by the New York City Department of Consumer and Worker Protection (DCWP) on 22 September, covers more than 260,000 workers. More than US$115 million will be paid directly to workers, while over US$16 million will go towards civil penalties and costs.
City officials described the agreement as the largest worker settlement in New York City history and the largest US settlement involving food delivery workers.
“Simply put, we screwed up,” DoorDash said in a statement, acknowledging that some workers were underpaid or paid late.
“Dashers should be paid in full, on time, every time. We are sorry to the Dashers we let down,” the company said.
Settlement follows pay investigation
The DCWP launched its investigation after receiving complaints from workers who said DoorDash had failed to pay them or had paid them late for completed deliveries.
Using detailed pay data, the agency subsequently found that thousands of workers had not been paid at all, while thousands more had received payments late. Those workers will receive approximately 200% of the amount they were shortchanged.
The agency also found that DoorDash had breached New York City's Minimum Pay Rate by excluding certain categories of trip and on-call time when calculating workers' pay. The rate is currently US$22.13 an hour, excluding tips.
DoorDash disputed the city's interpretation of how on-call time should be calculated, saying it had used a different method that it believed was fair and lawful. However, the company agreed to use the city's methodology going forward rather than continue the dispute.
DoorDash said the missed and late payments were linked to technical bugs, complex deliveries involving multiple stops or trips across city boundaries, and incomplete or inaccurate banking information provided by workers.
The company said fewer than 1% of payments to New York workers were affected and that 65% of affected workers were underpaid by US$1 or less. Each affected worker will receive at least US$10.
Workers to receive more than US$115m
The settlement comprises three main components. DoorDash will pay US$12.3 million to workers who were underpaid or paid late, while more than US$83 million will resolve the dispute over the calculation of pay for time workers spent logged in between deliveries.
A further US$16.7 million will be paid in fines to the DCWP. The settlement also includes a three-year compliance programme under which DoorDash will submit monthly data reports to the city and update its software to address the issues identified in the investigation.
An internal compliance monitor will be required to certify the company's compliance to the city annually under oath.
The Workers Justice Project and Princeton University's Workers' Algorithm Observatory will also develop software allowing workers to share their trip and earnings data directly with the DCWP. DoorDash will not be allowed to prevent workers from using the tool or penalise them for doing so.
DCWP Commissioner Samuel Levine said the settlement demonstrated that “opaque algorithms will not have the final word” on delivery workers' pay.
Payments to begin in October
Workers covered by the settlement will not need to submit a claim to receive compensation.
The city's settlement administrator is expected to email workers in late October who were underpaid between 22 April 2022 and 28 June 2026.
A second round of payments is expected in early 2027 for a smaller group of workers, as DoorDash continues correcting parts of the calculation that resulted in additional underpayments.
DoorDash said it had already set aside the full settlement amount in previous quarters.