DoorDash to Pay $16.75 Million in Settlement Over Tip Handling Practices

More than 60,000 individuals may be eligible for restitution payments, with distributions expected to begin in early 2025 following an investigation by AG James.

DoorDash has agreed to a $16.75 million settlement with the New York Attorney General’s Office following an investigation into the company’s past tipping policies. The settlement, announced by Attorney General Letitia James, resolves allegations that the food delivery service misled both customers and workers by using customer tips to offset base pay rather than passing them directly to workers.

The settlement covers delivery workers, known as "Dashers," who operated in New York between May 2017 and September 2019. More than 60,000 individuals may be eligible for restitution payments, with distributions expected to begin in early 2025. An additional $1 million will be allocated to cover administrative costs associated with processing claims.

According to the Attorney General’s Office, DoorDash previously used a pay model in which Dashers were shown a guaranteed amount before accepting a delivery. However, rather than adding customer tips to this base pay, the company allegedly applied those tips to meet the guaranteed total—reducing its own financial contribution.

For example, if DoorDash set a guaranteed pay of $10 for a delivery:

• A worker would receive $10 if a customer did not tip, with DoorDash covering the full amount.

• If a customer tipped $3, DoorDash would contribute only $7, ensuring the total still amounted to $10.

• If a customer tipped $9, DoorDash’s contribution dropped to $1, again maintaining the total at $10.

The Attorney General’s Office stated that this model was not clearly disclosed to customers, who were led to believe their tips were paid in full to the Dashers. Messaging at checkout stated that "Dashers will always receive 100 percent of the tip," while the details of DoorDash’s pay structure were reportedly buried in online documents.

As part of the agreement, DoorDash has committed to several changes to its pay and transparency policies, including:

• Ensuring all customer tips go directly to Dashers without reducing base pay.

• Clearly disclosing pay structures to both customers and workers.

• Providing Dashers—active and deactivated alike—access to their delivery history for at least four years.

Eligible Dashers will receive notifications about the settlement through mail, email, and text messages, explaining how to file claims.

Worker advocacy groups, including Los Deliveristas Unidos and the Worker’s Justice Project, have welcomed the settlement, framing it as a step toward greater transparency and fairness in the gig economy. Representatives from the groups have criticized DoorDash’s past practices, arguing that they exemplify broader issues within the app-based delivery industry.

A DoorDash spokesperson did not immediately comment on the settlement, but the company has previously stated that it revised its pay model in 2019 to ensure that tips are fully passed on to workers.

In recent years, similar settlements have been reached with companies such as Uber, Lyft, and Drizly over alleged wage violations and tip-related concerns. New York delivery workers affected by the settlement are encouraged to watch for official notifications and file claims when the process begins later this year.