Legal
DoorDash pays out hush money ahead of IPO
$2.5M
The settlement payout for D.C. delivery workers.
DoorDash’s villainy hit a speed bump on its road to being even more successful. CNBC reports the company will pay out $2.5 million in a Washington D.C. lawsuit pertaining to its previous Dasher pay model.
Reformed in September 2019, the pay model used customers’ tips to reach the minimum payouts it promised its employees — uh, that is, "independent contractors." D.C.’s district attorney Karl Racine is also going after Instacart for similar practices.
Most of this settlement will go to delivery workers in the D.C. area as DoorDash prepares to go public.
Legal woes — This settlement arrives shortly after DoorDash filed with the SEC ahead of its IPO. In its S-1 filing, the suit is one of nine current lawsuits the company is facing in the U.S and Canada. This does not include the 18 cases against it for its misclassification of its delivery workers as independent contractors, 17 of which are within Californian jurisdiction and likely no longer a problem thanks to Prop 22.
It seems like lobbying for Prop 22 was money well spent, especially since Uber and Lyft did most of the financial heavy lifting and took the majority of the heat from the opposition — so far. While the legislation initially fumbled its requirements for several industries — with California Governor Gavin Newsom ultimately exempting many — the bill continues to protect millions of workers, from those in retail to janitors. Other states think similar legislation is worth the risk, and now they know what not to do.
On a federal level, the current U.S. Department of Labor recently proposed a rule to support the kind of employee misclassification gig companies and other businesses rely on. President-Elect Joe Biden's Labor Department, however, is expected to favor workers' rights, so any gig company victories are likely short-lived.
A drop in the bucket — This week's news brings DoorDash’s total settlement payouts to $179.5 million, including recent settlements made with an unknown percentage of 35,000 individual arbitrations from its workers. In D.C., $1.5 million of this week’s settlement will go directly to delivery workers in the area with the rest split between the district and two local charities.
DoorDash was already dominating the food delivery landscape and has only grown during the pandemic, reporting profitability (with adjusted earnings). The Financial Times reports that the company is expected to go public in December with a valuation of more than $20 billion.
