DoorDash has agreed to pay $131.5 million to settle claims by New York City that the company underpaid or failed to pay approximately 246,000 delivery couriers, marking the largest settlement for food delivery workers secured by a U.S. municipality to date. The agreement, announced on Tuesday by New York City Mayor Chokarn Mamdani, includes provisions for ongoing monitoring of DoorDash’s payment practices over the next three years.
The settlement addresses violations related to a 2023 city law aimed at improving compensation for delivery workers, many of whom operate electric bikes and mopeds. Among the key issues were DoorDash’s failure to pay workers for all logged-in time, and delays or omissions in wage payments. The company will allocate $115 million to compensate workers and pay an additional $16 million in civil penalties.
“Our city will not tolerate a megacorporation that made nearly a billion dollars in profits last year ripping off the working people who keep our city moving,” Mayor Mamdani said at a City Hall news conference.
DoorDash acknowledged errors in its pay calculations that led to underpayments or delays, attributing many issues to technical bugs and the complexities of deliveries crossing city boundaries or involving multiple stops. The company stated it had corrected these problems and would comply with the city’s mandated payment method going forward. “We screwed it up,” DoorDash said, emphasizing that rather than prolonging legal disputes, it chose to expedite payments to workers.
Under the settlement, DoorDash is required to submit detailed pay data to the city’s Department of Consumer and Worker Protection, allowing for audits to ensure compliance. Samuel Levine, commissioner of the department, highlighted that the agreement signals a new era of enforcement in New York. “We will not tolerate nickeling and diming New York City workers,” he said.
The investigation began in 2023 after couriers raised concerns about missing wages with the Worker’s Justice Project, a labor rights group, which then alerted city officials. Analysis of over 152 million individual payment transactions revealed widespread wage violations, including unpaid or late payments.
Approximately $83 million of the settlement funds will be used to reimburse workers for time they spent logged into the app between deliveries, an area of contention between DoorDash and the city regarding pay calculations. Median reimbursements to workers are estimated at around $48, though more than 700 couriers are owed over $10,000 each.
To bolster enforcement efforts, the city plans to collaborate with the Workers’ Algorithm Observatory and the Worker’s Justice Project to develop software enabling workers to share trip and pay data directly with officials. This initiative aims to increase transparency around the algorithms that determine pay rates.
Ligia M. Gualpa, executive director of the Worker’s Justice Project, described the settlement as a warning to all delivery platforms about wage enforcement. “For too long, DoorDash has treated workers as disposable,” she said.
New York City and state officials have been scrutinizing delivery companies for years over alleged exploitation of a largely immigrant workforce that became essential during the COVID-19 pandemic. Efforts to protect these workers have included legislation requiring more prominent display of tipping options in the apps, a measure DoorDash and UberEats initially opposed through unsuccessful litigation.
The settlement underscores growing governmental commitment to regulating gig economy companies and ensuring fair compensation for essential delivery workers.