DoorDash settles with DC AG over claims it misled users

A DoorDash Inc. delivery person places an order in an insulated bag at Chef Geoff’s Restaurant in Washington DC

Andrew Harrer | Bloomberg Getty Images

Dordash claimed a $ 2.5 million agreement with the Attorney General of the District of Columbia to mislead consumers about how it would allocate suggestions for workers, the AG’s office announced on Tuesday.

AG Carl Racine filed a lawsuit against Dordash in November 2019, alleging that the company convinced customers that their tips would directly increase drivers’ salaries. Instead, Racine alleged at the time, those tips were used to compensate for the minimum payment. DoorDash promised its employees between 2017 and 2019 under the previous tipping model. Dordash has amended the policy and denied the allegations in the Consent Order.

Under the settlement, DoorDash will need to continue making suggestions to leave workers without reducing their base pay and providing accessible information to customers and workers about its payment models and policies.

According to a press release from the AG’s office, the settlement will include $ 1.5 million to delivery workers, $ 750,000 to the district and $ 250,000 to two locals.

“Today’s settlement unfairly defrauded DC consumers and should be paid to money-deprived workers,” Racine said in a statement. “Gig economy companies provide critical and essential services, especially during epidemics. However, the law applies to these companies, as it does to their brick and mortar counterparts.”

A spokesman for DoorDash said, “We are behind us in this case, and thank the Attorney General’s Office of DC for this work.” “Our focus is on continuing to support dashers, restaurants and customers in DC and across the country.”

The settlement comes at least two weeks after Dordash filed its prospectus to go public. Dordash stated in its filing that failing to “attract and retain dashers cost-effectively” was a significant risk factor for her business.

DoorDash is not the only gig company that has attracted attention for its wavering policies. This summer, the grocery filed a lawsuit against delivery company Instacart, claiming that an alternative service charge to mislead customers went to the workers when he walked into the company. In a statement at the time, Instacart stated that it always tells customers that the tips are separate from service fees and notes that fees go toward its operation. It said that 100% of customer tips go to workers.

Both companies are proactive to push back on regulation that would classify their workers as employees rather than contractors. He supported the successful Proposition 22 in California with Uber, Lyft and Postmates to hire app-based delivery and transportation workers as independent contractors. Employment conditions can bring additional costs for companies.

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