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DoorDash has agreed to a $131 million settlement with the city for underpaying tips to delivery workers, ending a legal battle between City Hall and the food delivery company.
The deal stems from a report earlier this year by the city Department of Consumer and Worker Protection that accused DoorDash and Uber Eats of ripping off delivery workers out of more than $550 million because of the companies’ tipping system.
“Simply put, we screwed up,” DoorDash officials said in a statement this week. “Our mistakes meant some Dashers were underpaid or paid late.
“While these mistakes weren’t intentional, that doesn’t make them okay,” the statement said. “We pride ourselves on operational excellence at DoorDash – and this was not excellent, nor was it acceptable. Dashers should be paid in full, on time, every time. We are sorry to the Dashers we let down.”
According to the city report released in January, the average tip for DoorDash and Uber Eats delivery workers plunged from $3.66 per order to just 93 cents in the week after the new rules went into effect — and later dropped even further, to 76 cents per delivery.
Big Apple laws require the food delivery apps to offer customers a chance to leave tips for drivers at checkout, with a default option of 10% of the cost of the order.
The two food delivery apps, among the world’s largest in the industry, introduced after-checkout systems at the same time the city introduced inflation-adjusted pay hikes for food delivery workers — which consumer protection officials said meant workers were paid late or not paid at all.
While the settlement resolves the dispute, DoorDash officials said it only affects less than 1% of company delivery workers in the five boroughs, with about 264,000 “Dashers” in line for a payment.
The company said about $6.6 million worth of payments never reached the drivers, while another $5.7 million was paid out days or even weeks late. However, the average missing payment for average delivery workers is only $7.70, with a median of $48, the company said.
The settlement includes $12.3 million for Dashers who were underpaid or paid late, $83 million is to resolve a disagreement over how to calculate pay for time drivers spend online between deliveries, while the rest of the money will pay off city fines, the company said.
“Despite our best efforts to comply with the new rules, we made mistakes,” DoorDash officials said. “Many errors were caused by technical bugs or happened in complicated situations: deliveries that crossed city boundaries, had multiple pickup or drop-off locations, or were only partially fulfilled or cancelled.
“In other cases, errors stemmed from Dashers providing incomplete or inaccurate banking information.”
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