Mayor Mamdani Backs DoorDash Settlement Returning $104M to New York Delivery Workers

New York City Mayor Zohran Mamdani has announced a major settlement with food delivery platform DoorDash that will return at least $104 million (£77.34 million) to tens of thousands of delivery workers after an investigation found the company used customer tips to subsidise workers' guaranteed pay rather than providing them on top of their earnings.

The agreement, announced by the New York Attorney General's Office, resolves allegations that DoorDash's previous payment model misled both customers and delivery workers between 2017 and 2019. Under the settlement, eligible delivery workers will receive compensation, while the company has agreed to change aspects of its payment practices to improve transparency. DoorDash has denied wrongdoing but said it was pleased to resolve the matter.

The settlement has drawn praise from Mayor Mamdani, who has made improving conditions for gig workers one of the key priorities of his administration. Supporters say the agreement represents one of the largest financial recoveries ever secured for food delivery workers in the United States.

How the Tipping Scheme Worked

According to investigators, DoorDash operated a guaranteed-pay model in which workers were promised a minimum amount for each delivery.

When customers added a tip through the app, many believed that money would be paid directly to the delivery driver in addition to the guaranteed amount. Instead, investigators alleged that DoorDash counted customer tips toward the guaranteed minimum, allowing the company to reduce the amount it contributed itself.

For example, if a worker was guaranteed $10 (£7.44) for a delivery and a customer tipped $4 (£2.97), DoorDash could contribute only $6 (£4.46) while still paying the worker the promised $10 (£7.44. Customers were allegedly not clearly informed that their tips were being used to offset the company's own payment obligations.

The New York Attorney General argued that the practice deprived workers of millions of dollars they reasonably expected to receive from customer gratuities.

At Least $104 Million Will Be Returned

Under the settlement, DoorDash will pay at least $104 million (£77.34 million) to eligible delivery workers who completed deliveries in New York between May 2017 and September 2019.

The Attorney General's Office estimates that more than 60,000 Dashers could qualify for payments. Workers do not need to remain active on the platform to receive compensation, provided they meet the eligibility requirements established by the settlement.

Officials said the money represents tips that customers intended to go directly to drivers rather than subsidising DoorDash's guaranteed-pay system.

DoorDash said it changed its pay model in 2019 and maintains that the previous system always guaranteed workers the amount promised for each delivery. The company added that it believes the older model was misunderstood by customers and has since introduced a more transparent payment structure.

Mamdani Highlights Support for Gig Workers

Mayor Mamdani welcomed the settlement, describing it as an important victory for delivery workers who play a vital role in New York City's economy.

His administration has repeatedly advocated for stronger labour protections for gig economy workers, including food delivery couriers who often work long hours without many of the employment benefits available to traditional employees.

Labour advocates also praised the agreement, saying it sends a message that companies must clearly explain how customer tips are used and ensure workers receive the compensation customers intend them to receive.

The case is one of several recent efforts by New York officials to strengthen oversight of app-based delivery platforms and improve conditions for workers in the rapidly growing gig economy.

A Broader Push for Transparency

The DoorDash settlement reflects growing scrutiny of how technology companies compensate independent contractors.

In recent years, regulators across the United States have examined whether app-based companies provide sufficient transparency regarding pay, tips and fees charged to customers. Delivery workers have also pushed for higher wages, greater access to benefits and stronger legal protections as demand for food delivery services has continued to grow.

While DoorDash says its current payment system no longer uses the model examined during the investigation, the settlement serves as a reminder of how gig economy compensation has evolved over the past decade.

For thousands of New York delivery workers, the agreement means long-awaited financial compensation. For customers, it reinforces the expectation that when they leave a tip for a courier, that money should go directly to the person making the delivery.