DoorDash to pay $131.5m to settle New York City underpayment probe

DoorDash will pay $131.5 million to settle a New York City investigation that found the food delivery company underpaid or waited too long to pay hundreds of thousands of delivery workers. The settlement includes over $115 million in direct relief for roughly 264,000 workers, whom DoorDash calls Dashers, with a median payout of about $48 per person. The company will also pay a $16.7 million civil fine.

DoorDash said the errors affected under 1% of overall local transactions, but city officials described the failures as deliberate. "Simply put, we screwed up," DoorDash said in a statement. "Our mistakes meant some Dashers were underpaid or paid late. While these mistakes weren't intentional, that doesn't make them okay."

The largest portion of the payout, $83 million, resolves a disagreement over how to calculate pay for time workers spent logged into the app but not making deliveries. New York rules require compensation for all time logged in, but DoorDash traditionally paid only for active deliveries. The company blamed "complex" changes to the state minimum wage introduced in 2023, as well as technical glitches and multi-stop delivery routes.

According to the city, systemic errors caused around $6.6 million in wages to never reach workers at all, and another $5.7 million arrived days or weeks late. DoorDash said it has patched the software bugs responsible for the mistakes and that local workers now earn roughly $30 per active hour on average. Mayor Zohran Mamdani called the settlement the city's largest labor enforcement action and said it advanced a longstanding effort to hold delivery companies accountable.

"For years, DoorDash failed to count every hour worked by delivery workers," Mamdani said. "This was not a rounding error or an accidental mistake." He also condemned the company's use of "greedy algorithms."

As part of the agreement, DoorDash will send detailed pay data to the city every month for three years. City officials declined to say whether Uber Eats and Grubhub are complying with the 2023 law. Uber declined to comment, and Grubhub did not immediately respond to requests.

The settlement comes nearly eight months after the city accused DoorDash and Uber Eats of using "design tricks" to deprive workers of more than $550 million in tips. DoorDash, Uber Eats and Grubhub have had multiple legal battles with New York City over tipping laws and data-sharing requirements.