DoorDash will pay $2.5 million to settle DC suit over driver tips

DoorDash will pay a total of $2.5 million to settle a lawsuit filed last year by D.C.’s attorney general alleging it misled customers about how much of their tips were actually going to delivery drivers.

The settlement includes $1.5 million in payments directly to DoorDash drivers in the District, as well as $750,000 to the District itself, and $250,000 to be donated to local charities.

Karl Racine’s suit alleged DoorDash misled consumers and used tips made through the delivery app to boost the company’s bottom line — specifically, that the tips were used to subsidize DoorDash’s payments to workers, and weren’t dispersed to them on top of their regular delivery wage.

DoorDash — which has revised the policy that was in effect between 2017 and 2019 — is also required to provide clear and easy-to-access information abut its policies and payment model to both consumers and its employees.

In the consent order it agreed to, it also denied the allegations.

DoorDash is required to ensure that all consumer tips go to the delivery drivers, and do not have any effect of their base pay.

“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 statement. “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.”

The AG’s office says the $750,000 D.C. will collect covers part of its cost of investigating and litigating the case.

N Street Village, which supports homeless and low-income women, will receive $125,000. Another $125,000 will be given to the Hook Hall Helps/Restaurant Association of Metropolitan Washington Worker Relief Fund, which supports restaurant workers impacted by the pandemic.

Jeff Clabaugh

Jeff Clabaugh has spent 20 years covering the Washington region's economy and financial markets for WTOP as part of a partnership with the Washington Business Journal, and officially joined the WTOP newsroom staff in January 2016.

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