NYC Mayor Mamdani Announces $131.5 Million DoorDash Settlement for Underpaid Deliverymen: Settlement Explained

DoorDash Inc. has agreed to pay $131.5 million to settle a New York City investigation into compliance with the city’s minimum wage rules for delivery drivers, Mayor Zohran Mamdani’s administration announced Tuesday.

According to a Bloomberg report, the settlement includes more than $83 million to resolve a dispute over how DoorDash calculated pay for couriers’ time spent online waiting between deliveries. Another $12.3 million will go to couriers who were underpaid or paid late because of invalid bank information linked to their accounts.

DoorDash will also pay $16.7 million in fines to the city’s Department of Consumer and Worker Protection (DCWP), which enforces minimum wage rules.

About 264,000 delivery drivers will receive compensation as part of the settlement, DoorDash said. Of these, about 209,000 will be compensated for missing or late payments.

The average missing payment owed to affected couriers was $7.70. DoorDash said 65% of those affected were underpaid by $1 or less, but the company will pay each affected courier at least $10. The average settlement payment will be about $48.

“When a worker earns wages, they deserve to be paid — not tomorrow, not after a lawsuit, but on time and in full,” Mamdani said in a statement. He added that his administration would continue to audit companies regarding employee pay and protections.

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Why DoorDash agreed to settle

At the center of the dispute is New York’s minimum wage rule for app-based delivery workers, which took effect in 2023 after an appeals court rejected efforts by DoorDash, Uber Technologies Inc. and Grubhub about blocking it.

The rule requires delivery companies to pay couriers a base wage of $22.13 an hour, which is calculated based on workers’ total delivery time and time spent waiting between orders.

DoorDash questioned how that idle time should be calculated for workers who were outside of New York City, such as in New Jersey or Long Island, but remained available to receive deliveries within the five boroughs.

DoorDash acknowledged payment errors. “We screwed up, and our mistakes meant that some NYC Dashers were underpaid or late,” the company said, adding that it would pay employees what they were owed and address the causes of the mistakes.

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Mamdani’s administration is stepping up scrutiny of concert workers

The settlement is the latest action by the Mamdani administration involving gig economy labor practices.

The administration said it has recovered about $104 million in additional tips for application delivery workers since January. In August, Mamdani also supported legislation aimed at subcontracting Amazon’s delivery model, which would make the big companies more directly responsible for drivers and conditions at last-mile facilities.

What about delivery charges and tips?

The settlement comes amid a broader dispute over how delivery apps have responded to New York’s pay rules.

After the minimum wage rule went into effect in 2023, DoorDash and Uber passed some of the additional costs on to consumers through higher fees. The companies also moved their tip prompts so customers didn’t see them until after the order was placed.

According to a Bloomberg analysis of 2024 data that delivery apps submitted to DCWP, customers tipped couriers 64% less and paid 45% more in delivery order fees after the changes.

Mamdani’s administration criticized the interface changes, saying they had robbed delivery workers of $550 million in tips.

New York City has since implemented new tipping rules that require delivery apps to display a tip option at checkout, with a minimum of 10% by default.