D.C. Attorney General Karl A. Racine on Tuesday announced a settlement with food delivery service DoorDash, requiring it to pay $2.5 million following claims that it misled D.C. consumers and pocketed tips that were supposed to have gone to workers.
“Today’s settlement rights a wrong that deceived D.C. consumers and deprived workers of monies that they should have been paid,” Racine said in a press release. “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.”
Following an investigation into DoorDash’s business practices, Racine’s office sued the company in November 2019 for allegedly misleading customers by collecting money for contract workers’ tips, and then putting it toward workers’ base pay.
The longstanding practice had been used by multiple companies to lower labor costs, but sparked a backlash when an Instacart worker’s pay stub went viral earlier that year. It showed a payment of 80 cents for 69 minutes of work — despite a $10 tip.
DoorDash changed its tipping policies later in the year, telling DCist at the time that all contract workers, known as “Dashers,” operated under a new payment model as of October 2019.
The company maintained that it did nothing wrong at the time of the lawsuit’s filing. “We believe the assertions made in the complaint are without merit and we look forward to responding to them through the legal process,” it told DCist.
The company continues to deny the allegations, per the consent order.
“We’re pleased to have this issue behind us, and thank the Office of the Attorney General for D.C. for its work throughout this process. Our focus is on continuing to support Dashers, restaurants, and customers in DC and around the country,” it said in an email to DCist.
Racine’s office filed a similar suit against Instacart this summer, alleging that the company charged Washingtonians millions of dollars in deceptive fees and had failed to pay D.C. sales taxes.
As part of the settlement announced Tuesday, DoorDash will be required to pay $1.5 million in relief for impacted workers and $750,000 to D.C., in part to cover the cost of litigation and the investigation.
In addition, DoorDash will contribute $250,000 to two local charities — N Street Village, which provides services to low-income women and women experiencing homelessness; and Hook Hall Helps and Restaurant Association Metropolitan Washington’s Worker Relief Fund, which supports workers affected by the pandemic.
The company will also be required to maintain a payment model ensuring that the entirety of consumer tips are distributed to workers, and that those tips do not impact the base amount workers earn from DoorDash, among other provisions.
Late last month, officials in Montgomery County warned residents of the high fees often charged by third-party delivery services like DoorDash, Uber Eats and Grubhub.
