$16.75M DoorDash Settlement with NY AG Ends Investigation Over ‘Deceptive’ Tip-Offset Pay Model

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New York Attorney General Letitia James has announced a $16.75 million settlement with DoorDash after an investigation found that the online delivery platform wrongfully used customer tips to offset the base pay it guaranteed to drivers, rather than give Dashers the full tips they rightfully earned. 

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In a February 24 press release, Attorney General James said DoorDash applied its “deceptive pay model” to roughly 63,000 New York delivery workers from May 2017 to September 2019, while also misleading customers as to how their tips would be used. During this time period, New Yorkers placed more than 11 million delivery orders with DoorDash, the press release says. 

Funds from the DoorDash settlement will be distributed directly to Dashers impacted by the challenged pay model, “providing them with the compensation they were denied,” the press release states. DoorDash settlement payouts are expected to begin in early 2025. 

More information on how to file a DoorDash settlement claim form to receive money from the deal is expected to be shared in the coming weeks, with eligible drivers to be contacted by the settlement administrator via mail, email or text.

“DoorDash misled customers who generously tipped and deceived Dashers who deserved to be paid in full,” Attorney General James said. “This settlement returns millions to the pockets of hardworking Dashers and ensures transparency in DoorDash’s payment practices going forward.” 

Related Reading: DoorDash Class Action Lawsuit 

An investigation by the New York Office of the Attorney General (OAG) found that under the allegedly deceptive pay model, which allowed Dashers to see how much they would be paid before accepting deliveries, workers were only able to see their tips “if they were greater than the amount DoorDash had already guaranteed to pay them for the order.” DoorDash would always pay a minimum of $1 to the worker and then use tips paid by the customer to offset the rest of the amount guaranteed to the worker, the OAG found. 

Though customers were led to believe their tips would directly benefit Dashers, DoorDash instead used the tips to cover its own costs and only paid the workers whatever tips did not cover, the OAG said.

Related Reading: Class Action Settlements in 2025 

The New York OAG also found that DoorDash failed to clearly disclose these practices to customers and workers. Customers had no way of knowing that DoorDash would pocket their tips to offset what it owed to Dashers and “reduce its own costs,” the OAG found. 

“At checkout, customers were encouraged to tip with a message reading ‘Dashers will always receive 100 percent of the tip,’” the press release says. “Disclosures about the use of tips were buried in online documents and inaccessible during critical moments of the ordering process.” 

Attorney General James said that, for example, for orders with a guaranteed amount of $10, if a customer tipped $0, DoorDash would pay $10—$1 plus $9 remainder—and the Dasher would receive $10. If a customer tipped $6, DoorDash would pay $4—$1 plus $3 remainder—and the driver would still only receive $10. If the customer tipped $9, DoorDash would pay $1—$1 plus $0 remainder—with the driver still receiving only $10. If a customer tipped $11, DoorDash would pay $1—$1 plus $0 remainder—and the Dasher would receive only $12, the press release says. 

In addition to paying the $16.75 million settlement, DoorDash must revise its payment practices so as to “maintain a pay model that ensures consumer tips are paid to Dashers in their entirety” without impacting DoorDash’s guaranteed pay obligations, the OAG said. DoorDash must also clearly disclose its pay policy details to Dashers and consumers, and share a breakdown of “base pay, promotional bonuses, and tips” for every delivery, among other business practice changes, the press release stated. 

Last year an $11.25 million DoorDash settlement was reached between the platform and the Office of the Attorney General of Illinois over allegations concerning DoorDash’s “guaranteed pay” model. Like the New York OAG, Illinois Attorney General Kwame Raoul alleged DoorDash led consumers to believe their tips would be used to increase Dashers’ earnings above the pay promised by DoorDash, when the company instead used tips to help satisfy its minimum pay guarantee. 

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