Food delivery service DoorDash recently agreed to a settlement with the District of Columbia Office of the Attorney General. According to a lawsuit filed by the OAG against DoorDash last year, DoorDash told consumers that tips for DoorDash workers were used to increase their pay. In reality, DoorDash included customer tips in its payments to workers, rather than using them as a gratuity. In other words, workers received the same pay regardless of the tip size, while DoorDash cut costs by paying less from its own funds to workers who received larger tips. This model allegedly persisted from July 2017 until the fall of 2019, violating consumer protection laws in the District of Columbia.
The litigation ended with a settlement that provided for payments totaling $2.5 million and changes to DoorDash tip policies. Of the payments, $1.5 million will go to DoorDash workers who delivered food to District of Columbia customers during the period of the deceptive tipping policy. Another $750,000 will go to the District of Columbia government, including compensation for the costs of investigating and litigating the case. Finally, a $250,000 payment will be divided between two charities. One of these charities supports homeless and low-income women, while the other charity supports restaurant workers who have incurred hardships due to the COVID-19 pandemic.
The settlement also provides that DoorDash will adjust its tip policy to ensure that tips by customers go directly to workers. This means that the size of the tip no longer will be factored into DoorDash payments, and workers who earn larger tips will take home an amount that reflects the size of those tips. Moreover, DoorDash agreed to provide accurate information about its payment policies to consumers and workers, and it pledged to disclose any future changes to its payment policies. To improve transparency, DoorDash must inform consumers at checkout about its payment policies, and it must provide an itemized summary of charges that lists amounts for tips, service fees, and taxes as well as the items purchased. It must provide a similarly itemized summary of each delivery to a worker that lists amounts for tips and promotional payments as well as base pay.
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