DoorDash Will Pay $2.5 Million in Tip-Skimming Settlement

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It’s time for DoorDash to settle up. As part of a settlement for a lawsuit alleging that it misled customers in Washington, D.C., and skimmed tips meant for delivery workers, the online delivery platform will pay out $2.5 million. That includes $1.5 million paid out to DoorDash delivery workers, $750,000 to D.C., and another $250,000 to two separate charities. The settlement was announced today by D.C. Attorney General Karl Racine, who in a press release said, “Today’s settlement rights a wrong that deceived D.C. consumers and deprived workers of monies that they should have been paid.”

DoorDash has been in hot water over its tipping practices more than once. Last summer, a New York Times report about the lives of online delivery workers in New York City resurfaced the company’s practice of using tips (if made by card) to pay the delivery worker’s guaranteed $7 per delivery. In response, the company promised to eventually address the issue, which it did. (Not long after, it also bought its competitor Caviar.) This system will apparently end as a result of the lawsuit: DoorDash will have to use a tipping system that ensures tips that go directly to workers without it lowering their pay before tips. DoorDash, it should be noted here, was one of the companies that poured money into California’s Prop 22, which exempts them from classifying gig workers as employees with basic protections.

Delivery orders have boomed during the COVID-19 pandemic, driven by well-heeled customers who can afford to pay the premium. Despite this, DoorDash revealed, as part of its IPO papers, that it still lost $149 million during the first nine months of the year, and expects growth to slow after the pandemic. The restaurant industry has been particularly hard hit by the pandemic — and the winter, as COVID cases surge, is certain to be brutal — and delivery platforms like DoorDash were widely criticized for maintaining exorbitant fees of up to 30 percent. (Municipalities including San Francisco and New York City instituted caps on those fees; in April, DoorDash temporarily reduced its fees for independent restaurants.) One solution is to, simply, order your food from the restaurant directly.

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