DoorDash settles NYC pay probe for $131.5M

Food delivery bag on bicycle in city street illustrating NYC pay settlement for delivery drivers

Key Points

01DoorDash (DASH) will pay $131.5 million to New York City over worker pay issues
02Settlement covers about 264,000 delivery workers underpaid or paid late
03Deal requires three years of pay monitoring and detailed data reporting
04Notices to affected workers will start in late October for past underpayments

DoorDash reaches $131.5 million deal with New York City

DoorDash (DASH) has agreed to a $131.5 million settlement with New York City to resolve a probe into its payment practices for delivery workers. The agreement addresses underpayments, missed payments, and late payments affecting roughly 264,000 couriers who work as independent contractors on the platform.

The settlement is the result of an investigation by the city’s Department of Consumer and Worker Protection into how delivery workers, known as Dashers, were compensated while using the app in New York City. City officials have pursued several actions over multiple administrations to address treatment and pay of delivery workers.

Breakdown of the settlement components

More than $83 million of the $131.5 million package will go toward resolving a dispute over how to calculate pay for time workers are logged into the app and on-call between deliveries. This component is aimed at workers’ on-call or online time, not just time spent actively completing orders.

Around $12.3 million will compensate couriers who were underpaid or paid late, including roughly $6.6 million in payments that never reached workers and $5.7 million that were delayed. DoorDash (DASH) will also pay $16.7 million in fines to New York City’s Department of Consumer and Worker Protection.

Payments to affected Dashers

DoorDash said it will contact affected workers and distribute payments, with a stated median payment of about $48 per impacted worker. The company indicated that 65% of impacted workers were underpaid by $1 or less, and that the average missing payment owed is $7.70.

Under the settlement, each affected Dasher will receive at least $10 even if the underpayment amount was less than that. Personalized notices to eligible workers are expected to begin in late October, covering underpayments identified between April 22, 2022 and June 28, 2026.

Monitoring, compliance, and company response

The agreement establishes a three-year monitoring program under which DoorDash must submit detailed pay data to the city so that compliance can be audited. A new monitoring and compliance system will allow the city to review practices and give workers mechanisms to report issues.

In a statement, DoorDash said it believed its previous method for calculating pay was fair, practical, and legal, but chose to adopt the city’s method rather than engage in prolonged dispute. The company acknowledged errors that left some New York City Dashers underpaid or paid late, stating, “We screwed up,” and said it would use the city’s pay calculation approach going forward.

Key Takeaways

01The settlement imposes both financial penalties and structural changes, coupling back pay and fines with a three-year monitoring regime.
02Most individual underpayments were small, but the large number of affected workers produced a substantial overall settlement amount.
03The agreement clarifies how on-call app time must be treated in pay calculations, setting a reference point for future enforcement in New York City.

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