AG Racine Reaches $2.5 Million Agreement with DoorDash for Misrepresenting that Consumer Tips Would Go to Food Delivery Drivers

Settlement Includes $1.5M in Relief for DoorDash Drivers

WASHINGTON, D.C. – Attorney General Karl A. Racine today announced a settlement with DoorDash, Inc., a food delivery service, requiring it to pay $2.5 million to resolve allegations that it misled D.C. consumers and used tips left for workers to boost the company’s bottom line. In a November 2019 lawsuit, the Office of the Attorney General (OAG) alleged that from 2017 until 2019, DoorDash misled consumers to believe that their tips would increase worker pay, when, in fact, tips were used to subsidize DoorDash’s payments to its workers. DoorDash has since revised its tips policy. As part of the settlement, DoorDash will pay $1.5 million in relief to delivery workers, pay $750,000 to the District, and donate $250,000 to two District charities. The company will also be required to maintain a payment model that ensures all tips go to workers without lowering their base pay, and it will be required to provide clear and easy-to-access information about its policies and payment model to workers and consumers.

“Today’s settlement rights a wrong that deceived D.C. consumers and deprived workers of monies that they should have been paid,” said AG Racine. “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. All businesses in the District must provide consumers with truthful information and cannot deprive workers of monies they have earned. We are pleased that DoorDash has changed its polices, and with this settlement has taken responsibility for its actions.”

DoorDash, Inc., is an on-demand food delivery service based in San Francisco and operating in over 4,000 cities across North America. Consumers place orders through the company’s app and “gig economy” workers pick it up and deliver it the consumer. There are tens of thousands of DoorDash consumers and workers in the District, collectively requesting and completing thousands of delivery orders on a weekly basis.

OAG filed suit against DoorDash in November 2019, alleging that the company misled consumers about how tips contributed to worker pay. The lawsuit alleged that DoorDash violated the District’s consumer protection laws by encouraging consumers to leave tips and leading them to believe they were boosting the pay of delivery workers. However, under a deceptive payment model in place from July 2017 to September 2019, DoorDash actually used these tips from consumers to cover its own payments to workers instead of passing them along as a gratuity—meaning that the more consumers tipped, the less DoorDash had to pay workers itself.

Under the terms of the settlement, DoorDash will be required to:

  • Pay $1.5 million to affected workers: DoorDash will pay $1.5 million to workers who made deliveries to consumers in the District of Columbia while the company’s deceptive tipping policy was in place.
     
  • Pay $750,000 to the District: The company’s payment will in part cover the District’s cost of investigating and litigating this matter.
     
  • Pay $250,000 to District charities: DoorDash will donate $125,000.00 to N Street Village, which supports homeless and low-income women, and $125,000.00 to the Hook Hall Helps/Restaurant Association Metropolitan Washington Worker Relief Fund, which supports restaurant workers affected by the COVID-19 pandemic.
     
  • Ensure tips go directly to workers: DoorDash will maintain a worker payment model that ensures that the entirety of consumer tips are distributed to workers, and that a consumer’s tip does not have any effect on the base amount paid by DoorDash to workers.
     
  • Provide clear and easy-to-access information to consumers and workers: The company must clearly inform consumers and workers about how workers are paid and must disclose any future changes to their tipping practices or overall payment model. DoorDash is required to provide this information to consumers at checkout, along with an itemized summary of charges, including item costs, tips, service fees and taxes. It is also required to provide an itemized summary of payments to workers for each delivery they make, including base pay, tips, and any promotional payments.

A copy of the consent judgment is available at: https://oag.dc.gov/sites/default/files/2020-11/DoorDash-Judgment.pdf

A copy of the consent order is available at: https://oag.dc.gov/sites/default/files/2020-11/DoorDash-Consent-Order.pdf

How to Report Unfair Business Practices
To report scams, fraud, or unfair business practices, contact OAG’s Office of Consumer Protection by calling (202) 442-9828, emailing consumer.protection@dc.gov, or submit a complaint online.

Attachments