By Jonathan Stempel
NEW YORK, Sept 22 (Reuters) – DoorDash said on Tuesday it will pay $131.5 million to settle a New York City government probe that found the food delivery company underpaid or waited too long to pay workers.
Mayor Zohran Mamdani called the settlement the city’s largest labor enforcement action. It advances the city’s longstanding effort to hold food delivery companies to a 2023 law intended to improve pay for delivery workers.
The accord also came nearly eight months after the city’s Department of Consumer and Worker Protection accused DoorDash and rival Uber Eats of engineering “design tricks” to deprive workers of more than $550 million in tips.
DoorDash will provide nearly $115 million of relief to about 264,000 workers, whom it calls Dashers, with a median payout of about $48. It accepted a $16.7 million civil fine.
“Simply put, we screwed up,” San Francisco-based 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.”
Shares of DoorDash rose 0.2% in afternoon trading.
The payout includes $83 million to resolve a dispute over how to calculate pay for workers who were logged into the company’s app but not actually making deliveries. Another $12.3 million addresses payments that were missed or arrived days or weeks late.
DoorDash also agreed to send detailed pay data to the city every month for three years.
MAYOR FAULTS ‘GREEDY ALGORITHMS’
At a press conference, Mamdani called the settlement “part of a larger commitment to hold delivery companies accountable.”
He said DoorDash, through its use of “greedy algorithms,” failed to comply with the 2023 city law intended to improve pay for delivery workers.
“For years, DoorDash failed to count every hour worked by delivery workers,” Mamdani said. “This was not a rounding error or an accidental mistake.”
City officials declined to address whether Uber Eats and the delivery app Grubhub are complying with the 2023 law.
Uber declined to comment. Grubhub did not immediately respond to requests for comment.
DoorDash said many errors resulted from deliveries that crossed city boundaries, had multiple pickup or drop-off locations, or were only partially fulfilled or canceled.
It said other errors resulted from technical bugs, or having incomplete banking information for workers. The company said it has fixed technical issues that caused the mistakes.
DoorDash, Uber Eats and Grubhub have had multiple legal battles with New York City, including challenges to its tipping laws and whether they must share customers’ data with restaurants.
(Reporting by Jonathan Stempel in New York; Editing by Sam Holmes, Alexandra Hudson and Sanjeev Miglani)
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