What's happened
DoorDash has agreed to pay $16.75 million to settle a lawsuit alleging it misused customer tips to offset worker wages between May 2017 and September 2019. Approximately 63,000 delivery workers in New York will benefit from the settlement, which aims to rectify past pay practices that misled both workers and customers.
What's behind the headline?
Key Insights
- Misleading Practices: DoorDash's previous model allowed it to use customer tips to reduce its own wage obligations, which was not disclosed to either customers or workers. This lack of transparency raises ethical concerns about gig economy practices.
- Financial Impact: The settlement will distribute between $10,000 and $14,000 to each eligible worker, providing significant restitution to those affected by the misleading pay structure.
- Regulatory Scrutiny: The case highlights increasing scrutiny of gig economy companies regarding their pay practices and transparency. As more states investigate similar practices, companies may face stricter regulations.
- Future Compliance: DoorDash is required to report to the Attorney General's office every six months for three years to ensure compliance with the settlement terms, indicating ongoing oversight of its practices.
What the papers say
According to the New York Post, Attorney General Letitia James stated, "This is just fundamentally unfair," emphasizing the deceptive nature of DoorDash's practices. Business Insider UK reported that the settlement will benefit around 60,000 delivery workers, with James noting that DoorDash executives were aware of the deceptive nature of their pay model. TechCrunch highlighted DoorDash's commitment to fair earnings, stating that the allegations pertained to an outdated pay model retired in 2019. The Independent reiterated the lack of transparency that misled both customers and workers, reinforcing the need for clearer practices in the gig economy.
How we got here
The lawsuit, led by New York Attorney General Letitia James, claimed DoorDash's pay model misrepresented how tips were used, leading to unfair compensation for delivery workers. The company has since retired this model in 2019.
Go deeper
- What led to the lawsuit against DoorDash?
- How will the settlement affect delivery workers?
- What changes has DoorDash made since the lawsuit?
Common question
-
What Does DoorDash's $16.75 Million Settlement Mean for Delivery Workers?
DoorDash has recently agreed to a significant $16.75 million settlement over allegations of unfair wage practices that affected thousands of delivery workers. This settlement raises important questions about the gig economy and how companies handle tips and wages. Below, we explore the implications of this settlement for delivery workers and what changes may be on the horizon.
-
How Does the DoorDash Settlement Affect Delivery Workers?
The recent $16.75 million settlement by DoorDash has raised important questions about the impact on delivery workers. This settlement addresses allegations of misusing customer tips to offset worker wages, which has significant implications for those in the gig economy. Below, we explore the key aspects of this settlement and what it means for workers moving forward.
More on these topics
-
DoorDash Inc. is an American on-demand prepared food delivery service founded in 2013 by Stanford students Tony Xu, Stanley Tang, Andy Fang and Evan Moore.
-
Letitia Ann "Tish" James is an American lawyer, activist, and politician. She is a member of the Democratic Party, and is the Attorney General of New York having won the 2018 election to succeed appointed attorney general Barbara Underwood.
-
New York is a state in the Northeastern United States. New York was one of the original thirteen colonies that formed the United States. With more than 19 million residents in 2019, it is the fourth-most-populous state.
