DoorDash has agreed to a $2.5 million settlement of a lawsuit brought by the DC attorney general last year charging that it deceived customers into thinking their tips were going to delivery drivers.
Attorney General Karl A. Racine announced on November 19 last year that he filed the lawsuit, “seeking to recover from DoorDash millions of dollars in tip money that consumers thought they were paying to workers, and to impose civil penalties.”
The settlement is set to include $1.5 million in restitution to the company’s DC drivers, $750,000 to the District to partially cover legal expenses incurred by the suit, and $250,000 which will be donated to local charities.
The suit alleged that DoorDash used tips provided by customers to misleadingly “subsidize” drivers salaries, adding the extra money to company profit without distributing it to drivers.
‘Deceptive’ Financial Policies
The San Francisco based firm has revised its allegedly “deceptive” financial policies, which were in place between 2017 and 2019. DoorDash is now required by the settlement “to provide clear and easy-to-access information about its policies and payment model to both consumers and its employees.”
However, in the judgment handed down by the court, the company denied the allegations as part of the agreement.
The agreement stipulates that any and all tips will go directly to delivery drivers rather than being siphoned off for company profit.
In comments after settlement of the case, Attorney General Racine said, “Today’s settlement rights a wrong that deceived DC 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.”
Out of the $250,000 awarded to charities as part of the settlement, $125,000 will be given to the Hook Hall Helps/Restaurant Association of Metropolitan Washington Worker Relief Fund which assists restaurant workers affected by the pandemic and N Street Village, a charity dedicated to supporting homeless and low-income women.