DoorDash forced to pay $131M after algorithm errors shortchanged 264,000 delivery drivers

DoorDash have spoken out after finalizing a huge $131 million settlement after algorithm errors resulting in shortchanging hundreds of thousands of drivers.

Delivery drivers for the app will now receive a payout after 264,000 workers were underpaid by DoorDash after the firm was hit with a lawsuit by the NYC Department of Consumer and Worker Protection.

Taking to social media to share a statement where they admitted that they ‘messed up’, DoorDash said: “Since 2023, more than 200,000 Dashers in New York City were underpaid or paid late under the City’s delivery worker pay rules. These errors were unintentional, but that doesn’t make them acceptable. Dashers should be paid in full, on time, every time. We take full responsibility, and we’re deeply sorry.

“We’ve reached a $131.5 million settlement with the NYC Department of Consumer and Worker Protection. Every impacted Dasher will receive the amount they are owed, and they’ll be contacted directly with payment details.

“We understand the impact of even one missed or late payment. We’ve addressed the issues that caused these errors and made changes to prevent them from happening again.”

NYC Mayor Zohran Mamdani also spoke out, writing on X, formerly Twitter: “DoorDash has ripped off more than 260,000 NYC delivery workers. We’re making them pay $131.5 million — the largest worker settlement in City history. This is New York, where hard work pays and greed will cost you.”

DoorDash workers weren’t paid enough

In the lawsuit, it argued that some workers for DoorDash weren’t paid the minimum amount required by law during the period from December 2023 to June 2026.

It is estimated by DoorDash that around $6.6 million in payments owed to drivers never made it into their pockets.

Adding to their statement, the company said: “Our mistakes meant some NYC Dashers were underpaid or paid late. That’s unacceptable, and we’re deeply sorry to the Dashers we let down.

“We’ve reached a settlement with the City of New York, and we will make this right by paying every impacted Dasher the amounts they are owed.”

What went wrong with DoorDash driver payments?

According to the food delivery app, errors were made in the payments of delivery drivers due to either ‘technical bugs’ or ‘complicated situations’, which the firm describes as being ‘deliveries that crossed city boundaries, had multiple pickup or drop-off locations, or were only partially fulfilled or cancelled’.

DoorDash explained: “Most of this settlement isn't about late or missing pay, but how to calculate bonuses paid to Dashers for online or on-call time - the hours a Dasher is logged into the app but not on an active delivery. Under the City’s rules, Dashers must be paid for this time spent online between deliveries, and they were. We calculated on-call time differently than the City, and believe our approach was fair, practical, and legal. But rather than spend years fighting over whose method was right, we chose to pay Dashers sooner and use the City’s method going forward.”

DoorDash first launched in 2013, becoming officially available in NYC in 2015, initially serving Brooklyn. Later that same year, it expanded to Manhattan.

DoorDash went public on the New York Stock Exchange in 2020, raising around $3.37 billion in its IPO (Initial Public Offering), and is now the largest food delivery platform in the United States.