DoorDash To Pay $5.325 Million Settlement for Not Paying San Francisco Workers Benefits

San Francisco officials, led by City Attorney David Chiu, announced that the city reached a $5.325 million lawsuit settlement with DoorDash on Monday over the company allegedly not paying workers certain benefits dating back to 2016.

An investigation launched earlier this year by the San Francisco Office of Labor Standards Enforcement (SLOE) investigated reports that the food delivery company had been misclassifying workers, used customer tips as a factor into pay, and failed to provide 4,500 workers both sick leave and health care coverage. Rideshare and app-based deliverers companies covered by the independent contractor/employee AB 5 law are currently in limbo due to Proposition 22, the California voter initiative that exempted these companies from coverage under AB 5, currently being litigated, the laws favor employees.

In San Francisco, employers with 20 or more workers are required to spend a minimum amount on health benefits for each employee, many of whom have that status now due to AB 5, and the current court ruling blocking Prop 22. Employers in San Francisco are also legally required to provide sick leave to all employees.

The San Francisco Office of Labor Standards Enforcement investigation found violations by DoorDash between 2016 and 2020, resulting in the company paying the city a $5.325 million settlement.

“We are living through an era of deep inequality, and nothing could be more important than ensuring workers are paid fairly and their benefits are safeguarded,” said City Attorney Chiu on Monday. “The city conducted a thorough, diligent investigation that resulted in this unprecedented settlement for San Francisco workers.”

“We believe DoorDash couriers were misclassified and should have been employees for years. That is not part of the settlement but it is the perspective of the city.”

Other city leaders added to Chiu’s statement on Monday.

“While this wage theft complaint was filed three years ago, it covers conduct that DoorDash continued during the pandemic, a particularly devastating time for workers and small businesses,” said Supervisor Aaron Peskin on Monday. “We hope this victory brings restitution and relief to those harmed, including the knowledge that this settlement is a tacit acknowledgment that drivers are workers – and as such, have rights and protections under the law.”

A $5.325 million settlement in SF

According to the settlement, $5.137 million will go directly to DoorDash workers, with the city only receiving $187,000 to cover the costs of the investigation. Most workers will receive between $500 and $1,000, although some employees will reportedly receive up to $17,000.

DoorDash denied any wrongdoing in a statement on Monday, but said they settled to avoid a much more expensive protracted legal fight against the city.

“While we deny any wrongdoing, we feel that this settlement represents a fair compromise that will allow us to focus on continuing to provide the best experience for Dashers,” the company said in a statement Monday.

Legal commentators noted on Monday that while there was a settlement, other potential lawsuits over AB 5 and Prop 22 concerned areas could fare differently.

“The fight over both AB 5 and Prop. 22 is not over,” Los Angeles labor lawyer Zoe Fischer told the Globe on Monday. “DoorDash paid today because it was a potential lawsuit. Other cases right now are challenging the very laws themselves, especially exemptions for certain industries, so while there may have been grounds for a settlement today, the landscape to do so may look wildly different this time next year.”

Clashes between DoorDash and other delivery companies against San Francisco are expected to continue as other issues, such as city-implemented delivery fee caps, are currently being challenged in court.

The $5.325 settlement on Monday was the largest sum ever secured by the San Francisco Office of Labor Standards Enforcement since the office was established in 2001.