Settlement is largest of its kind in any US city and is set to affect 260,000 delivery drivers.

New York City has finalised a more than $131m settlement with DoorDash amid allegations that the delivery company underpaid its workers.

The administration of Mayor Zohran Mamdani announced the settlement on Tuesday. It marked the largest settlement for delivery workers in any city in the United States, set to affect 260,000 workers. Of the total, $115m will go directly to the workers, while $16m will go towards civil penalties and other costs.

A nearly 70-page consent order, provided to Al Jazeera by the city’s Department of Consumer and Worker Protection (DCWP), found the San Francisco, California-based delivery giant failed to pay some of its workers the minimum amount required by law between December 2023 and June 2026.

The city expected some of those underpayments to continue through November before corrective measures go into effect, according to the order.

DoorDash confirmed that roughly $6.6m in payments never reached its delivery drivers and that there were more than $5.7m in late payments. A spokesperson for the company told Al Jazeera that it will notify the affected workers in the coming weeks.

The city echoed DoorDash’s statement and said it has already identified the affected workers using DoorDash’s records.

“When a worker earns a wage, they deserve to be paid that wage — not tomorrow, not after a lawsuit, but on time and in full,” Mayor Zohran Mamdani said at a news conference on Tuesday.

The city government said that underpaid workers would receive 200 percent of what they were originally owed.

“A worker who was owed $1,000 but received no payment will receive $3,000. A worker who was paid $1,000 later than allowed under the law will receive $2,000,” a news release announcing the settlement said.

‘Put money back in people’s pockets’

The city began cracking down on delivery driver underpayments under Mamdani’s predecessor, Eric Adams.

His administration established a first-of-its-kind minimum-pay rule for app-based delivery workers in 2023.

Delivery companies, including DoorDash, Grubhub and Uber, were required to meet a minimum pay rate for covered work.

The rule initially called for a minimum pay rate of $17.96 per hour and was set to increase to $19.96 per hour when fully implemented in 2025.

Samuel Levine of the Department of Consumer and Worker Protection (DCWP) said that the settlement is a result of the Mamdani administration expanding its enforcement capabilities after increasing staff when he took office in January.

“What we’ve been able to show, particularly over the last nine months of the Mamdani administration, is that by investing directly and bringing in the best lawyers, investigators, data scientists, and economists to the government, we can cut through a lot of the noise, identify violations when they happen, and put money back in people’s pockets,” Levine told Al Jazeera.

New York is not the only city in the US to attempt to address delivery driver underpayments.

Seattle, Washington has also adopted a minimum-payment system. Starting in 2024, the city began using data from delivery platforms in an effort to enforce it.

In August, Uber Eats agreed to pay nearly $4.4m to settle allegations that the platform violated the city’s minimum-pay rules for delivery workers, affecting 14,000 workers.

Seattle’s Office of Labor Standards (OLS) said Uber Eats failed to provide required minimum payments for some cancelled orders, including instances when a driver had already arrived at a restaurant to pick up food.

Seattle also alleged that Uber Eats failed to provide minimum payments when either the pick-up or drop-off location was outside of the city limits.