DoorDash Owes Approximately $17 Million to its Delivery Workers: Here’s Why

On February 24, 2025, New York’s top prosecutor General Letitia James announced in a press release a $16.75 million settlement with delivery gig platform DoorDash for offsetting workers’ base pay rather than the full amount. Both customer and delivery workers, known as Dashers, were misled by utilizing the tips intended for the workers to subsidize their guaranteed pay. 

The investigation examined DoorDash’s alleged violations that took place in New York Executive Law and General Business Law in connection with DoorDash’s practices from approximately May 2017 to September 2019. The investigation looked into concerns about whether DoorDash misled both its consumers and its delivery workers regarding how it handled tips that consumers intended for the delivery workers. Specifically, when customers tipped delivery workers, the tip did not go on top of the worker’s guaranteed pay. Instead, DoorDash allegedly used the tip to subsidize (or cover part of) the guaranteed pay. This means that workers weren’t actually receiving extra money from tips. DoorDash was just using the tips to reduce how much it had to pay out of its own pocket causing DoorDash to pay almost $17 million in restitution for Dashers and up to $1 million in settlement administrator costs to help issue payments. 

The Office of the Attorney General of the State of New York (OAG) found DoorDash misled both customers and delivery workers regarding tip distribution. During the period that DoorDash was violating the laws, consumers expected their tips to be added on top of the promised pay for Dashers. However, DoorDash instead used customer tips to subsidize its own payout obligations.

The company’s formula ensured that Dashers received a “Guaranteed Amount” per delivery, but consumer tips effectively reduced DoorDash’s direct contribution. For example, if a delivery was guaranteed at $10 and a customer tipped $3, DoorDash only contributed $7. This meant Dashers earned the same $10 regardless of whether the customer tipped $0 or $9. Because Dashers were guaranteed a fixed pay per delivery, tips received from customers are a way to provide extra income. The investigation concluded that DoorDash made misleading claims and omitted key details about tip allocation, violating consumer protection laws.

On February 25, a DoorDash spokesperson told USA TODAY that they “remain committed to making sure that Dasher earnings are always fair and transparent." Furthermore, the spokesperson added, “While we believe that our practices properly represented how Dashers were paid during this period, we are pleased to have resolved this years-old matter and look forward to continuing to offer a flexible way for millions of people to reach their financial goals.” This means the settlement will return millions to the pockets of Dashers affected and ensures future transparency in their payment practices going forward. 

Ligia Guallpa, Executive Director of the Worker’s Justice Project and Co-founder of Los Deliveristas Unidos, emphasized that DoorDash’s actions reflect a deeper systemic issue, one where deception and exploitation aren’t just isolated incidents but core elements of its business model. She argued that any company built on taking advantage of both workers and consumers is fundamentally flawed. Her statement highlights not only the ongoing challenges in confronting exploitative labor practices in the gig economy but also the power of organized, collective action. The settlement serves as both a warning to other companies and a reminder of the progress that can be made when workers and advocates stand together.

In addition, DoorDash has been ordered to overhaul its payment policies following this investigation. Along with establishing a restitution fund for affected workers, the company must implement key reforms to ensure fairness and transparency. Moving forward, DoorDash must guarantee that 100% of consumer tips go directly to Dashers without reducing the company’s own contribution to guaranteed pay. Additionally, both Dashers and consumers will receive clearer breakdowns of earnings, including base pay, tips, and promotional bonuses, ensuring greater transparency in how payments are structured. To further protect workers, DoorDash must also grant all Dashers, including those who have been deactivated, access to their delivery history for at least four years. 

These changes come at a crucial time as policymakers and labor advocates push for stronger worker protections in the gig economy. With mounting pressure for fair wages and corporate accountability, DoorDash’s compliance could set a precedent for other app-based platforms, reshaping industry standards for worker compensation and transparency.

The recent ruling against DoorDash marks a significant step toward greater transparency and fairness for gig workers, but experts warn that similar infractions may persist. Andrew Wolf, an assistant professor at Cornell University’s School of Industrial & Labor Relations, told TODAY.com that the settlement highlights a broader issue within the gig economy. “The NYAG’s settlement today with DoorDash is the latest example of how gig companies’ failure to be transparent about how their algorithms operate results in wage theft, unpredictability, and shifts all the burdens of gig work onto workers,” Wolf said. He points out that app-based companies frequently change how wages are calculated without explaining these changes to workers, creating instability for a low-wage workforce.

This lack of transparency is at the heart of growing concerns over gig work, where pay structures are often dictated by opaque algorithms that can be altered unilaterally. Without stronger regulations, workers may continue to face unpredictable earnings and reduced bargaining power. The DoorDash ruling signals progress, but it also underscores the need for continued oversight and policy reforms to ensure that companies cannot manipulate pay structures at the expense of workers. As gig work becomes an increasingly dominant form of employment, addressing these issues is crucial to preventing exploitation and securing fair wages for all workers in the industry.

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