New York Attorney General Letitia James announced today the recovery of $4 million in withheld tips for over 8,000 delivery workers for Drizly, a now-defunct alcohol delivery platform owned by Uber, for failing to ensure delivery workers received their rightfully earned tips.
At least 8,385 delivery workers, many of whom are immigrants of color, stand to receive settlement funds.
The AG investigation, which began in June last year, found that Drizly actively encouraged customers to leave tips for delivery workers, including an automatic 10% tip at checkout. However, instead of paying the tips directly to the delivery workers, the tips were handed out to the liquor store owners, who distributed them as they saw fit.
As a result of the AG’s action, Drizly will pay $4 million in restitution to impacted delivery workers and an additional $200,000 to a settlement administrator, who will track and organize the disbursement of restitution money to delivery workers.
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“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,” said Attorney General James in a statement. “So many delivery workers work paycheck to paycheck, and denying them their hard-earned tips could mean the difference between making ends meet and not being able to put food on the table.”
In New York City, surveys find that an overwhelming number of delivery workers are non-white, with the majority working full-time as delivery workers.
This is not the first time Drizly has gotten into hot water for failing to pay its workers tips. In 2022, Drizly agreed to pay workers in Washington, D.C., $1.95 million for stealing tips between 2019 and 2022.
Drizly began operations in New York in 2013. Customers could purchase alcohol from local stores for delivery. At its peak, 2,453 stores across the state used Drizly, with 1,375 of those stores located in New York City alone. In 2021, Uber acquired Drizly for $1.1 billion and consolidated the business into Uber Eats before shutting it down in 2024.
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Liquor stores using Drizly could either outsource deliveries or employ their own delivery workers. For delivery workers employed by the stores, including more than 8,300 workers at 2,453 stores throughout New York state, Drizly sent all of the tips to the store owners, who then decided how tips would be distributed.
As of August 2023, over 80% of Drizly orders were being delivered directly by store employees. However, according to the AG’s office, even though Drizly was heavily involved in the stores’ delivery processes, they failed to ensure that delivery workers were being paid their tips from deliveries.
Drizly also encouraged liquor stores to engage in “tip pooling,” or splitting tips among all employees rather than giving them directly to the workers who earned them, a practice the AG office says is unlawful for liquor store employees in New York. Despite this, Drizly continued to encourage tip pooling and did not implement any mechanism to ensure the delivery workers received the money intended for them.
In addition to enabling and encouraging unfair tipping practices, the AG office claims that Drizly deceived customers about how tips were used and distributed. When individuals placed orders through Drizly’s platform, Drizly encouraged them to tip their delivery workers on its checkout screen.
Still, according to the AG, Drizly failed to adequately notify customers that the tips would not go directly to delivery workers or clarify that stores were responsible for tipping their employees. Instead, Drizly misled many customers into believing that the full amount of the tip they paid was going to the delivery worker who delivered their order.
In response to Documented’s request for comment, Uber claimed that Drizly was a “marketplace provider” that operated a platform through which consumers purchased wine, beer, or liquor directly from local liquor stores.
According to Uber, Drizly acted only as the middleman between app users who placed orders on the app and individual retailers. Those retailers were required by Drizly’s terms of service to comply with all local, state, and federal laws, including tipping regulations.
“While it operated, Drizly’s business model put its retail partners in control of the alcohol sale end-to-end, including arrangement of delivery to the consumer,” said Meghan Casserly
head of communications, delivery for Uber. “Drizly did not collect consumer payments or receive any portion of the tips the City alleges were not paid to the appropriate recipients. Nevertheless, on behalf of Drizly, Uber is doing the right thing by compensating drivers, and we are pleased to put this matter behind us.”
Delivery workers could begin filling claims in January, but a settlement administrator responsible for the disbursement of restitution money has yet to be selected.
