DoorDash has agreed to a $131.5 million settlement with New York City after admitting to systemic errors that resulted in underpaid or late wages for over 260,000 delivery workers.

DoorDash will pay $131.5 million to settle claims that it failed to properly compensate delivery workers in New York City. The agreement, announced by city officials, resolves investigations into wage violations and requires the company to implement a new monitoring system to ensure future compliance with local labor laws. DoorDash publicly acknowledged the errors, stating that technical bugs and complex delivery scenarios led to the payment failures.

Scope of the Settlement and Violations

The settlement is described by city officials as the largest worker payout in New York City history. The majority of the funds will be distributed to more than 260,000 workers who were either underpaid, paid late, or not paid at all for their services. Additionally, the company will pay approximately $16 million in civil penalties and other costs to the city. According to the BBC, $83 million of the total settlement is specifically allocated to resolve disputes regarding how the company calculated compensation for time workers spent online between active deliveries. DoorDash attributed the payment failures to technical glitches and the complexity of navigating New York’s minimum wage standards, which were updated in 2023. The company noted that errors occurred during deliveries involving multiple stops, cancellations, or routes that crossed city boundaries. While the firm stated that these issues affected less than 1% of its local transactions, it confirmed that systemic errors resulted in $6.6 million in wages never reaching workers, while another $5.7 million was paid out with delays.

Company Response and Regulatory Context

In a formal statement, DoorDash apologized to its delivery drivers, known as Dashers, stating, “Simply put, we screwed up.” The company emphasized that while the mistakes were not intentional, they were unacceptable. DoorDash reported that it has since patched the software bugs responsible for the payment errors and noted that local workers currently earn an average of roughly $30 per active hour. This settlement follows a series of conflicts between gig economy platforms and New York City regulators regarding tipping laws, minimum wage requirements, and data-sharing mandates. Last year, DoorDash reached a separate $17 million settlement regarding claims that it used customer tips to subsidize driver wages rather than allowing workers to keep tips on top of their guaranteed pay.