DoorDash admits its New York workers were underpaid, and now it’s costing the company millions

DoorDash is set to pay a massive $131.5m settlement to New York City regulators following an investigation into widespread wage violations. The company has officially admitted that it failed to pay thousands of delivery workers correctly or on time, a situation that has now created a significant financial burden for the food delivery giant.

As reported by BBC, the settlement is a direct result of an investigation conducted by the Department of Consumer and Worker Protection. The probe focused heavily on how the company calculates compensation for the time drivers spend waiting for orders, which has become a major point of contention in the gig economy. 

DoorDash acknowledged the failure in a blunt statement, saying, “Simply put, we screwed up.” The company further explained the situation by saying, “Our mistakes meant some Dashers were underpaid or paid late.”

The issue impacted roughly 264,000 workers

The largest portion of this payout, totaling $83m, is reportedly aimed at resolving a disagreement regarding how pay is calculated for the time workers spend online while waiting between deliveries. This idle time is a massive flashpoint for the entire industry. While apps have traditionally only paid drivers for the duration of active deliveries, New York rules mandate compensation for all time that a worker is logged into the app.

The San Francisco-based company pointed to several factors that led to these issues. They reportedly cited technical glitches and complex multi-stop delivery routes as primary reasons for the underpayments and delays. DoorDash also blamed the complex changes to the minimum wage in New York state that were introduced in 2023. Under these new standards, pay rates fluctuate based on the specific county, the number of employees, and various tipping factors.

According to DoorDash, these errors impacted roughly 264,000 workers. The company noted that systemic errors resulted in about $6.6m in wages never reaching the workers at all, while another $5.7m arrived days or even weeks behind schedule. 

Despite these significant figures, the firm insisted that the issues affected less than 1% of their overall local transactions. The company stated, “While these mistakes weren’t intentional, that doesn’t make them okay.” The company claims it has now patched the technical problems, which is a necessary move if they want to regain trust. Currently, DoorDash reports that local workers earn roughly $30 per active hour on average.