DoorDash to settle DC lawsuit over unfair tipping practices for $2.5 million

$1.5 million will go to delivery drivers in DC.

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DoorDash has agreed to pay $2.5 million to resolve allegations that it used customers’ tips to subsidize delivery drivers’ base pay in Washington, DC. If you’ll recall, the attorney general for the District of Columbia sued the company last year, accusing it of misleading “DC consumers and used tips left for workers to boost the company’s bottom line.”

The food delivery service came under fire in 2019 after reports emerged that it was using tips to cover part of drivers’ base pay instead of adding it on top of the minimum amount they were supposed to receive. It changed its tipping policy before the year ended, but it wasn’t able to avoid legal repercussions altogether. When the DC attorney general’s office sued the company, it pointed out that DoorDash was yet offer any compensation to customers and delivery workers since it changed its rules.

Under its new policy, the company has to offer base pay that ranges from $2 to $10 — the minimum used to be as low as $1 — and to give drivers 100 percent of their tips. Further, DoorDash has to show drivers a breakdown of how much they’re getting from the company and how much they’re receiving as tips from customers. The food delivery service has to ensure those rules are enforced as part of its settlement with the DC attorney general. As for the $2.5 million it has agreed to pay, $1.5 million will go to delivery workers in DC, $750,000 will go to the District to cover part of the cost of investigating and litigating the issue and $250,000 will go to a couple of DC charities.

DC Attorney General Karl A. Racine said in a statement:

“Today’s settlement rights a wrong that deceived D.C. consumers and deprived workers of monies that they should have been paid. Gig economy companies provide important and necessary services, especially during the pandemic. However, the law applies to these companies, just as it does to their brick and mortar counterparts. All businesses in the District must provide consumers with truthful information and cannot deprive workers of monies they have earned. We are pleased that DoorDash has changed its polices, and with this settlement has taken responsibility for its actions.”