New York City fines DoorDash $131 million over delivery driver tip issues

<p>New York City Mayor Zohran Mamdani criticized DoorDash CEO Tony Xu for promoting a "greedy algorithm" during a news conference where he announced a $131 million settlement with DoorDash over allegations of withholding delivery driver tips.</p><p>Mamdani referenced comments made by Xu on a podcast in July, stating, "A CEO, he said, has to take the greedy algorithm and keep going all the way to see if there is more." He explained that a greedy algorithm in computer science optimizes short-term outcomes without considering long-term consequences. Mamdani emphasized that delivery workers in New York City have faced the negative impacts of such a business model.</p><p>The settlement, which amounts to $131.5 million, is described as the largest for food delivery workers in American municipal history. Of this amount, $115 million will be returned to delivery workers, with some potentially receiving up to $5,000. The remainder will be allocated to fines and the development of software to help delivery workers record their app usage and share payment data with the city.</p><p>Mamdani stated, "For the first time, workers will have the power to crowdsource data and investigate the black box algorithms that dictate their schedules and pay." As part of the settlement, DoorDash is required to submit delivery worker payment data to the city regularly for three years.</p><p>DoorDash acknowledged underpaying workers but claimed it was unintentional. In a statement, the company said, "Simply put, we screwed up. While these mistakes weren’t intentional, that doesn’t make them okay. We pride ourselves on operational excellence at DoorDash – and this was not excellent, nor was it acceptable. Dashers should be paid in full, on time, every time. We are sorry to the Dashers we let down." However, Mamdani argued that the misconduct was not accidental, highlighting that DoorDash failed to account for all hours worked by delivery workers, particularly during canceled trips and those crossing city limits.</p><p>This announcement follows Mamdani's previous actions against food delivery companies, including a $5 million settlement with Uber Eats in January for not paying drivers minimum wage and an $875,000 settlement with HungryPanda for allegedly imposing illegal junk fees.</p>