DoorDash Shells Out $17 Million to Compensate Pilfered Driver Tips
DoorDash drivers in the Big Apple are in for a surprise payout, thanks to a recent settlement addressing some shady business practices from the past. New York Attorney General Letitia James announced that DoorDash will fork over $16.75 million to over 60,000 Deliverers who were short-changed on tips.
The lawsuit, filed against DoorDash, claimed that the company was deceiving its New York workers between May 2017 and September 2019. DoorDash had a misleading pay model, promising a minimum wage to its drivers. However, instead of paying the guaranteed amount and letting drivers keep their tips, DoorDash used the tips to cover their base pay and pocketed the difference.
In simpler terms, take the example of a task worth a guaranteed $10. DoorDash would pay at least $1, regardless of the price of the tip. But they would adjust the rest accordingly. If the tip was $5, DoorDash would count the $5 towards the guaranteed amount and cover the remaining $4. If the tip was $7, they would only pay $2 and keep the excess. The only instance where drivers received more than $10 was if the tip was higher than the guaranteed wage, meaning the extra tip would go to the driver.
The company also misled its customers about the distribution of tips. A message displayed to customers stated, "Dashers will always receive 100% of the tip," which was technically accurate but didn't clarify that "tip" was actually the delivery drivers' wage. The AG argued that these disclosures were hidden in online documents, and customers had no way of knowing that DoorDash was using tips to cut its expenses.
DoorDash eventually altered its payment system to ensure that the earnings directly reflected the customer's tip. However, this settlement signifies a long-overdue payout for drivers who were short-changed during the period when the company was less transparent about who was pocketing the extra cash.
Drivers who qualify for the settlement will receive a notice from the settlement administrator. It's better late than never, as they finally get the rightful tips they deserved.
Enrichment data:- DoorDash, a food delivery company, was accused of misusing tips from its drivers in New York by incorporating customer tips into the base pay of delivery workers, rather than adding them on top as extra earnings.- This practice occurred between May 2017 and September 2019. As a result, DoorDash agreed to a settlement of nearly $17 million to compensate affected drivers.- The settlement benefits around 63,000 "Dashers" who worked in New York during the specified period.
- The tech giant DoorDash, facing accusations of misusing tips in New York, agreed to pay a substantial sum of $16.75 million to over 60,000 Deliverers.
- The future of tech companies using tips as part of worker wages is under scrutiny, following disclosures of DoorDash's past practices, which misled both its workers and customers.
- In an attempt to rectify its past mistakes, DoorDash altered its payment system, ensuring that earnings now directly reflect the customer's tip, rather than being incorporated into the base pay.
- The settlement, which is a significant step towards fair compensation, has Letitia James, the New York Attorney General, congratulating Deliverers on receiving their rightful wages that were previously withheld due to shady business practices.
