Mamdani's $131.5 Million DoorDash Settlement Is Not What He Says It Is
· Reason
Another day, another settlement. Last month, New York City Mayor Zohran Mamdani announced a $131.5 million settlement with DoorDash for "stealing" delivery driver wages in the Big Apple. The agreement builds on additional settlements from earlier this year with other platforms, all as part of Mamdani's "New Era of Accountability" for gig companies.
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The actual details of the settlement tell a more modest story. While DoorDash did underpay a subset of workers, the average amounts at stake were relatively small. Instead, the lion's share of the settlement resulted from a dispute over how to precisely calculate driver wages—not from "stealing" wages—under NYC's minimum wage rule for gig work.
Mamdani may fashion himself as a roving gig-economy sheriff. But when it came to this settlement, the mayor mostly jumped in front of a parade that had already started. The fight dates back to 2023—long before Mamdani took office—when NYC first began investigating DoorDash for alleged underpayment of drivers under the city's minimum wage law for gig work. City staffers reviewed 152 million DoorDash transactions during the investigation, which finally concluded this year.
The top-line settlement number of $131.5 million deserves a closer look, as well. Of this sum, $12.3 million relates to delivery drivers who were underpaid or paid late. According to DoorDash, many of these underpayments were due to technical issues within the app or more complex deliveries that crossed city boundaries or were canceled mid-trip. In other situations, drivers themselves provided inaccurate banking information to the company.
The bulk of the settlement—$83 million—stemmed from the disagreement over how, exactly, to calculate driver pay. Under city law, for example, drivers must be compensated for so-called "idle time" between deliveries, but DoorDash disagreed on whether the government's rules would apply to drivers who spent part of that time located outside the city (such as in New Jersey). DoorDash argues that its method was "fair, practical, and legal," but that it still chose to settle "rather than spend years fighting over whose method was right."
To be sure, some drivers were significantly impacted by DoorDash's underpayments, with the city reporting that 700 workers were owed more than $10,000 each. "Simply put, we screwed up," the company said in a statement. "While these mistakes weren't intentional, that doesn't make them okay."
But it also bears noting that less than 1 percent of payments to delivery drivers were impacted. Sixty-five percent of the affected drivers were underpaid by $1 or less (although DoorDash will pay each impacted driver a minimum of $10 regardless). The average underpayment was $7.70; the median payout to drivers will be $48.
This didn't stop Mamdani from declaring: "City Hall will not sit idly by while a megacorporation that made nearly a billion dollars in profits last year rips off the working people who keep our city moving."
What's lost in Mamdani's statement is the conflation of actual underpayments with the aforementioned confusion over NYC's wage formula. As the Manhattan Institute's Santiago Vidal put it: "Mamdani combined the admitted cases of payment failure with the disputed on-call calculation into a broad anti-capitalist narrative—and called it corporate wage theft."
Not all of the money from the settlement is even going toward drivers. Over $16 million from the settlement comes in the form of penalties that will flow to the city's coffers. From this, $4.3 million is set aside for a compliance fund that will support the Workers Justice Project, an NYC labor interest group, as well as Princeton's pro-union Workers' Algorithm Observatory.
Mamdani's DoorDash settlement mirrors elements of the city's settlement with UberEats earlier this year. In that case, which again had preceded Mamdani, the city itself admitted that Uber Eats had been "mostly compliant" with the law and that underpayments stemmed from canceled orders. Nonetheless, in the settlement announcement, Mamdani again made use of the moment. "If you break the law and profit from exploitation," he said, "you will be held accountable, swiftly and directly."
Mamdani's bluster also overlooks the fact that NYC's minimum wage law for delivery work has created a host of negative consequences for both consumers and workers in Gotham. In the wake of the law, the number of delivery drivers in the city fell, delivery costs increased, and some 27,000 New Yorkers were locked out of the delivery market entirely due to platforms moving toward "arranged scheduling" models.
During his time in office, Mamdani has proven deft at repackaging previously-started investigations—and legitimate disputes over wage formulas—into narratives of cracking down on rampant corporate greed and wage theft. He has proven himself to be masterful when it comes to messaging. Which is all the more reason for New Yorkers to review the fine print before buying this act.
The post Mamdani's $131.5 Million DoorDash Settlement Is Not What He Says It Is appeared first on Reason Magazine.