DoorDash admits it screwed up after underpaying New York workers

DoorDash has agreed to pay a $131.5m (£99m) settlement to New York City regulators after the food delivery giant admitted failing to compensate thousands of workers correctly or on time.

“Simply put, we screwed up,” DoorDash said. “Our mistakes meant some Dashers were underpaid or paid late.”

The agreement with the Department of Consumer and Worker Protection follows a city investigation into wage violations, with a significant share of the payout addressing how DoorDash calculates compensation for the time delivery drivers spend waiting for orders.

The settlement marks another chapter in an ongoing battle between so-called gig economy platforms and municipal leaders.

The likes of Uber Eats and Grubhub have repeatedly clashed with city officials over tipping laws, minimum wages and data-sharing requirements.

The majority of DoorDash’s settlement – $83m – is to resolve a disagreement over how to calculate pay for the time workers spend online between deliveries.

Pay for idle time between orders is a major industry flashpoint.

Traditionally, apps only paid drivers during active deliveries but New York’s rules require compensation for all time logged into the app.

San Francisco-based DoorDash blamed “complex” changes to the minimum wage in New York state introduced in 2023.

Under the landmark minimum pay standard for app-based delivery workers, wages differ depending on the county, tipping and how many people work for the employer.

DoorDash also cited technical glitches and multi-stop delivery routes for causing the firm to underpay workers or delay wages.

The company said: “While these mistakes weren’t intentional, that doesn’t make them okay.”

DoorDash said local workers earn roughly $30 per active hour on average. It said it has now patched the software bugs responsible for the mistakes.

The business said the errors hit roughly 264,000 workers, though it insisted the issues affected under 1% of overall local transactions.

Systemic errors caused around $6.6m wages to never reach workers at all, and another $5.7m arrived days or weeks late.