DoorDash has agreed to pay $131.5 million to settle a dispute with New York City over payments to delivery workers, after the company acknowledged that thousands of Dashers were underpaid or paid late.
Under the agreement with New York City’s Department of Consumer and Worker Protection (DCWP), roughly 264,000 DoorDash delivery workers are set to receive payments. DoorDash said about 209,000 of them are being compensated specifically for payments that were either delayed or fell short of what they were owed.
The company acknowledged the payment problems in a statement posted on X.
“Since 2023, more than 200,000 Dashers in New York City were underpaid or paid late under the City’s delivery worker pay rules,” DoorDash said. “These errors were unintentional, but that doesn’t make them acceptable.”
The company added that it takes full responsibility for the errors and apologized to the affected workers.
Of the total settlement, $12.3 million is earmarked for Dashers who did not receive their full earnings or were paid after the expected date. Another $83 million-plus will go toward resolving a separate disagreement over how DoorDash calculated compensation for the time workers remained online and available for orders between deliveries.
The company will also pay $16.7 million in fines to the DCWP.
What went wrong with DoorDash payments?
New York City rolled out a new payment system for app-based delivery workers in 2023. Under the rules, delivery companies must pay workers for the time they spend completing deliveries, along with eligible time they remain logged into the platform and available while waiting for their next order.
DoorDash said the city’s system is one of the most complicated earning standards for delivery workers in the country.
The company said some of the payment mistakes were caused by technical problems and complicated delivery situations. These included trips that crossed city boundaries, deliveries involving multiple pickup or drop-off locations, and orders that were partially completed or canceled.
In some cases, DoorDash said incomplete or incorrect banking information provided by Dashers also contributed to payment problems.
According to DoorDash, about $6.6 million in payments never reached workers, while another $5.7 million was paid several days or, in some cases, weeks late.
The average missing payment was $7.70. DoorDash said 65% of affected Dashers were underpaid by $1 or less. However, every affected worker will receive at least $10 under the settlement, even if the amount originally owed was smaller.
The median payment will be about $48.
Dispute over time spent waiting for deliveries
A large part of the settlement does not involve missing or late payments.
Instead, it concerns how DoorDash calculated payments for time when Dashers were logged into the app and available to accept orders but were not actively making a delivery.
DoorDash said it paid Dashers for this time under New York City’s rules, but used a different method from the one preferred by the city to calculate the amount.
The company said it believed its approach was fair, practical and legal. Rather than continue the dispute for years, DoorDash said it agreed to use the city’s calculation method going forward and pay workers under the settlement.
According to a Bloomberg report, more than $83 million of the settlement is tied to this disagreement over how online or “on-call” time should be calculated.
The issue became particularly complicated for workers who were outside New York City, including parts of New Jersey or Long Island, while remaining available to accept deliveries within the city’s five boroughs.
NYC delivery workers to receive payments
DoorDash said it has already set aside the full settlement amount and has made changes to its payment systems.
The company said it has fixed technical issues that contributed to the errors and strengthened its compliance procedures. It has also added better checks for banking information to identify potential payment problems before they result in missed payments.
“We’re paying every impacted Dasher what they earned,” DoorDash said.
The company said affected Dashers will be contacted directly with information about their payments.
New York City Mayor Zohran Mamdani also addressed the settlement, saying workers should receive their wages on time and in full.
“When a worker earns a wage, they deserve to be paid that wage, not tomorrow, not after a lawsuit, but on time and in full,” Mamdani said.
He added that his administration would continue to scrutinize companies over worker pay and protections.
The dispute centers on New York City’s minimum-pay rules for app-based delivery workers, which took effect in 2023 following legal challenges from DoorDash, Uber and Grubhub.
DoorDash said New York City Dashers have earned more than $1 billion since the rules took effect, with average earnings of roughly $30 per active hour before tips.
The company said the payment errors affected less than 1% of all payments made to New York City Dashers.
Still, DoorDash acknowledged that even relatively small payment errors can affect workers who depend on delivery income.
“Dashers should be paid in full, on time, every time,” the company said. “We are sorry to the Dashers we let down.”