Drizly reaches $4M settlement with New York State to pay drivers full tips
Drizly must also pay $200,000 to track and distribute tip restitutions. Credit: Drizly
The New York State Attorney General’s office reached a $4 million settlement Tuesday with the defunct alcohol delivery business Drizly, after state officials said drivers were denied their full tips.
The company, bought by Uber in 2021, must pay the $4 million in restitution to delivery workers after the attorney general’s office said Drizly misled customers into thinking the entirety of tips went to the drivers. Instead, tips were sent to liquor stores and store owners for distribution, officials said.
The settlement includes 508 Long Island stores that used Drizly to deliver alcohol. Drizly utilized a total of 8,300 employees at 2,453 stores throughout New York State. The service thrived during the pandemic and was bought by Uber in 2021. It was consolidated as part of Uber Eats in March.
Uber officials could not immediately be reached for comment Tuesday.
Under the settlement agreement, "Drizly does not admit the findings made by the OAG or alleged violations of law." Drizly must pay the $4 million to the attorney general’s office within 30 days and state authorities have discretion on which delivery workers are eligible for restitution, according to the settlement.
"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," Attorney General Letitia James said 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. Now, we are finally returning this money to those who actually deserve it and who customers intended it would go to."
The attorney general’s office began investigating Drizly last year and excluded third-party app delivery drivers.
State officials said more than 80% of orders were delivered by individual liquor store employees. Online customers were prompted to leave tips, including at least 10% automatically built into each order. Liquor stores had the option to outsource deliveries or collect tips to decide how they would be distributed, state officials said.
The attorney general’s office said Drizly encouraged stores to pool and share tips, rather than pay out the full amount to drivers for each delivery. State officials said tip pooling for liquor store employees is illegal in New York and Drizly did not ensure tips went to individual drivers.
"As a result, many delivery workers did not receive all of the tips they earned," state officials said.
"Drizly misled its customers into believing that the total amount of tip they designated on Drizly would go to the delivery worker who delivered that particular order, omitted the material fact from customers that customer tips frequently did not change delivery pay, and misled stores about the legality of tip pooling," the attorney general’s office said in their settlement.
Drizly must also pay $200,000 as part of the settlement to pay an administrator to track and distribute tip restitutions for the owed delivery drivers. State surveys found that the vast majority of New York City delivery drivers work full time and are minorities.
The New York State Attorney General’s office reached a $4 million settlement Tuesday with the defunct alcohol delivery business Drizly, after state officials said drivers were denied their full tips.
The company, bought by Uber in 2021, must pay the $4 million in restitution to delivery workers after the attorney general’s office said Drizly misled customers into thinking the entirety of tips went to the drivers. Instead, tips were sent to liquor stores and store owners for distribution, officials said.
The settlement includes 508 Long Island stores that used Drizly to deliver alcohol. Drizly utilized a total of 8,300 employees at 2,453 stores throughout New York State. The service thrived during the pandemic and was bought by Uber in 2021. It was consolidated as part of Uber Eats in March.
Uber officials could not immediately be reached for comment Tuesday.
Under the settlement agreement, "Drizly does not admit the findings made by the OAG or alleged violations of law." Drizly must pay the $4 million to the attorney general’s office within 30 days and state authorities have discretion on which delivery workers are eligible for restitution, according to the settlement.
"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," Attorney General Letitia James said 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. Now, we are finally returning this money to those who actually deserve it and who customers intended it would go to."
The attorney general’s office began investigating Drizly last year and excluded third-party app delivery drivers.
State officials said more than 80% of orders were delivered by individual liquor store employees. Online customers were prompted to leave tips, including at least 10% automatically built into each order. Liquor stores had the option to outsource deliveries or collect tips to decide how they would be distributed, state officials said.
The attorney general’s office said Drizly encouraged stores to pool and share tips, rather than pay out the full amount to drivers for each delivery. State officials said tip pooling for liquor store employees is illegal in New York and Drizly did not ensure tips went to individual drivers.
"As a result, many delivery workers did not receive all of the tips they earned," state officials said.
"Drizly misled its customers into believing that the total amount of tip they designated on Drizly would go to the delivery worker who delivered that particular order, omitted the material fact from customers that customer tips frequently did not change delivery pay, and misled stores about the legality of tip pooling," the attorney general’s office said in their settlement.
Drizly must also pay $200,000 as part of the settlement to pay an administrator to track and distribute tip restitutions for the owed delivery drivers. State surveys found that the vast majority of New York City delivery drivers work full time and are minorities.
John Asbury is a breaking news and general assignment reporter. He has been with Newsday since 2014 and previously worked at The Press-Enterprise in Riverside, California.
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