New York Attorney General Letitia James has secured a $4 million settlement from the defunct alcohol delivery platform Drizly, which was owned by Uber before its closure earlier this year. The settlement is set to benefit the company's former delivery workers, who were found to have been denied their rightfully earned tips. According to the Office of the Attorney General's (OAG) investigation, Drizly customers were led to believe that their tips would go directly to delivery workers, when in fact they were sent to store owners, with no guarantee of being passed on to the employees.
Attorney General James stated, "Drizly misled its customers by encouraging them to tip and then failing to make sure those tips went to the delivery workers who earned them." The settlement comes as a sign of relief for more than 8,300 workers across New York. The failure to ensure tips reached the hands of delivery workers could, as James remarked, be the difference between sustenance and deprivation for many. The settlement intends to directly address these wrongs, ensuring that the struggling workers now receive what was originally intended for them by the customers, as per the Office of the Attorney General.
Drizly's delivery system, which began operations in 2013 and was acquired by Uber in 2021, presented an automated 10 percent tip at checkout for customer convenience. However, the company's tipping practices came under scrutiny when it was discovered that they actively encouraged "tip pooling," a method considered illegal for liquor store employees in New York. This, coupled with a murky distribution system, meant that many workers did not receive all or part of the tips left for them. The settlement, besides the restitution, also includes an additional $200,000 for a settlement administrator to disburse the funds.
The OAG's aggressive stance on wage theft has resulted in multiple recoveries this past year, including a substantial $328 million from Uber and Lyft, and $90,000 for Queens laundry workers, signaling a broader fight for fair labor practices. In the case of Drizly, the company is expected to pay out to roughly 8,385 delivery workers affected by this practice.
