DoorDash will pay a $2.5 million settlement to the Washington, D.C. attorney general’s office over a lawsuit filed in 2019 about the delivery service’s controversial tipping policies. Attorney General Karl Racine announced yesterday that DoorDash has agreed to the settlement “to resolve allegations that it mislead D.C. consumers and used tips left for workers to boost the company’s bottom line.”
Racine filed the suit in November of 2019, not long after DoorDash changed its much-maligned tipping policy where it used workers’ tips to contribute to their base pay. The lawsuit alleged that “the only thing the consumer’s tip changed was DoorDash’s share of the worker’s pay.” Most of the buying public, meanwhile, had no idea their tip money was going towards, well, not tips. Racine sought to recover millions in that tip money.
Which he has. According to the press release from the attorney general’s office, DoorDash will pay $1.5 million in relief to delivery workers in D.C., $750,000 to the District, and donate $250,000 to District charities. DoorDash will also “be required to maintain a payment model that ensures all tips go to workers without lowering their base pay” and provide transparency around its payment policies.
“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.
Color me cynical, but it doesn’t feel like as much of a victory as it might have even few months ago. It’s great workers are getting some of those tips back that were originally put towards their base pay. But $2.5 million ain’t a lot of dough when you consider that DoorDash (along with other gig economy companies) bankrolled Prop 22 for $200 million, the most expensive ballot measure in California’s history. It passed, meaning DoorDash drivers will remain independent contractors and the company is not on the hook to give its workers minimum wage, paid sick leave, and health care.
In other words, the Prop 22 saga showed us that gig economy companies will pay hundreds of millions to effectively not take care of the folks on whose backs these businesses are built. DoorDash may have changed its tipping policy, but I doubt a $2.5 million settlement will motivate the company to further alter its approach to handling its workforce anytime soon.
The settlement also comes just a couple weeks after DoorDash filed for its IPO. In that filing, DoorDash said that if it fails “to cost-effectively attract and retain Dashers,” the company’s business, operations, and financials could be “adversely affected.” Having an open lawsuit about a worker-treatment issue would have been counterproductive to that point, so the timing of the settlement isn’t likely coincidental. DoorDash said in its filing that it has over 1 million Dashers across all its markets. Attracting and retaining them is a key part of the company’s growth strategy — so long as it doesn’t chomp away at DoorDash’s profitability.