DoorDash Paying Drivers $17M for Stolen Tips

DoorDash drivers in New York are about to get an extra tip—and one that they’ve been owed for over half a decade. As part of a settlement announced by the state of New York’s Attorney General, Letitia James, DoorDash has agreed to pay $16.75 million to more than 60,000 Dashers who were supposed to receive that money in the form of tips but instead, the company used it to cover base pay and pocketed the rest.

New York’s lawsuit alleged that between May 2017 and September 2019, tens of thousands of Dashers were misled by DoorDash’s pay model. At the time, the company offered a guaranteed wage to drivers—the minimum amount that they could expect to make from a job. But instead of paying that guarantee and letting drivers keep their tips, DoorDash counted the tip toward their base pay and kept what was left.

Let’s say a driver is guaranteed $10 on a delivery. DoorDash would pay a minimum of $1 of that no matter what, but the rest would scale based on how the person who placed the order tipped. If they left a $5 tip, DoorDash counted that toward the guaranteed $10 wage and covered the remaining $4 on top of its $1 minimum. If the tip was $7, DoorDash just scaled down its own payment to $2. Under this model, the only way the driver ever saw more than $10 was if the customer tipped higher than the guaranteed payment—meaning if they tipped $11, that one extra dollar over the $10 guarantee would actually go to the driver instead of subsidizing DoorDash’s side of the payout.

That payment model would be skeevy even if DoorDash accurately explained how payments were distributed. But…it didn’t. Per the AG’s lawsuit, DoorDash showed a message to customers that said “Dashers will always receive 100 percent of the tip”—a statement that is technically true but does not clarify that “tip” is actually the delivery drivers’ wage. New York argued that disclosures explaining how tips worked were buried in online documents and “customers had no way of knowing that DoorDash was using tips to reduce its own costs.”

DoorDash did eventually change its payment model to ensure “earnings will increase by the exact amount a customer tips on every order,” but New York’s case represents drivers finally getting those tips they earned during the period when the company was less transparent about who was actually pocketing that extra cash.

Dashers eligible for the settlement will be contacted by the settlement administrator so they can get their piece of the pie that was rightfully theirs in the first place. Better late than never.