NYC Mayor Mamdani announces $131.5 million DoorDash settlement over underpaid delivery workers: Deal explained

New York City Mayor Zohran Mamdani announced a $131.5 million DoorDash settlement over delivery worker pay. About 264,000 couriers will receive compensation, while DoorDash will pay $16.7 million in fines to the city.

DoorDash Inc. has agreed to pay $131.5 million to settle a New York City investigation into its compliance with the city's minimum-pay rules for delivery workers, Mayor Zohran Mamdani's administration announced Tuesday.

According to a Bloomberg report, the settlement includes more than $83 million to resolve a dispute over how DoorDash calculated pay for time couriers spent online while waiting between deliveries. Another $12.3 million will go to couriers who were underpaid or paid late because of invalid bank information linked to their accounts.

DoorDash will also pay $16.7 million in fines to the city's Department of Consumer and Worker Protection (DCWP), which enforces the minimum-pay rules.

About 264,000 delivery workers will receive compensation under the settlement, DoorDash said. Of these, about 209,000 will be compensated for missing or late payments.

The average missing payment owed to affected couriers was $7.70. DoorDash said 65% of those affected were underpaid by $1 or less, but the company will pay every affected courier at least $10. The median settlement payment will be about $48.

"When a worker earns a wage, they deserve to be paid that wage — not tomorrow, not after a lawsuit, but on time and in full," Mamdani said in a statement. He added that his administration would continue scrutinising companies over worker pay and protections.

Why DoorDash agreed to the settlement

At the centre of the dispute is New York City's minimum-pay rule for app-based delivery workers, which took effect in 2023 after an appeals court rejected efforts by DoorDash, Uber Technologies Inc. and Grubhub to block it.

The rule requires delivery companies to pay couriers a base wage of $22.13 per hour, calculated using workers' total delivery-trip time and time spent waiting between orders.

DoorDash disputed how that idle time should be calculated for workers who were outside New York City, such as in New Jersey or Long Island, but remained available to accept deliveries within the city's five boroughs.

DoorDash acknowledged the payment errors. "We screwed up, and our mistakes meant some NYC Dashers were underpaid or paid late," the company said, adding that it would pay workers what they were owed and address the causes of the errors.

Mamdani administration steps up gig-worker scrutiny

The settlement is the latest action by Mamdani's administration involving labour practices in the gig economy.

The administration has said it has recovered about $104 million in additional tips for app-based delivery workers since January. In August, Mamdani also backed legislation aimed at Amazon's subcontracted delivery model that would make large companies more directly responsible for drivers and conditions at last-mile facilities.

What about delivery fees and tips?

The settlement comes amid a broader dispute over how delivery apps have responded to New York City's pay rules.

After the minimum-pay rule took effect in 2023, DoorDash and Uber passed some of the additional costs to consumers through higher fees. The companies also moved their tipping prompts so customers saw them only after placing orders.

According to Bloomberg's analysis of 2024 data submitted by delivery apps to the DCWP, customers tipped couriers 64% less and paid about 45% more in fees per delivery order following those changes.

The Mamdani administration criticised the interface changes, saying they had deprived delivery workers of $550 million in tips.

New York City has since introduced new tipping rules requiring delivery apps to display the tipping option at checkout, with the default set at a minimum of 10%.

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