Attorney General James Recovers $4 Million from Drizly for Former Delivery Workers

December 17, 2024

NEW YORK - New York Attorney General Letitia James today announced that she has recovered $4 million in withheld tips from Drizly, a now-defunct alcohol delivery platform owned by Uber, for failing to ensure delivery workers received their rightfully earned tips. An investigation by the Office of the Attorney General (OAG) found that Drizly actively encouraged customers to leave tips for delivery workers, even including an automatic 10 percent tip at checkout. However, Drizly led customers to believe that the entirety of those tips would go directly to the delivery workers who earned them, when in fact all tips instead went to store owners for distribution. Liquor stores using Drizly had the option to either outsource deliveries or to 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 a result of OAG's action, Drizly will pay $4 million in restitution to impacted delivery workers.

"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. "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. My office will always take on companies that mislead their customers and workers and undermine the laws meant to protect them."

Drizly was an online alcohol delivery platform that began operations in New York in 2013. Uber acquired Drizly in 2021 and shut it down in March 2024, after Uber decided to consolidate its food and alcohol delivery services into one platform, Uber Eats. Through Drizly, customers were able to purchase alcohol from local stores for delivery to their homes. In New York, 2,453 stores used the Drizly platform, including:

• New York City - 1,375
• Long Island - 508
• Hudson Valley - 194
• Western New York - 176
• Finger Lakes - 71
• Capital Region - 55
• Central New York - 31
• Southern Tier - 27
• North Country - 9
• Mohawk Valley - 7

Within New York City, stores in every borough used the Drizly platform:

• Manhattan - 409
• Brooklyn - 367
• Queens - 351
• Bronx - 109
• Staten Island - 39

As of August 2023, over 80 percent of Drizly orders were being delivered by store employees. These store employees did not automatically receive their earned tips through the Drizly app. Instead, Drizly sent all of the tips to the store owners, who then decided how tips would be distributed. Drizly failed to ensure that those tips were paid to the delivery workers who earned them, even though Drizly was heavily involved in stores' delivery processes. 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 that 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. As a result, many delivery workers did not receive all of the tips they earned.

In addition to enabling and encouraging unfair tipping practices, 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, writing, "we provide you with the opportunity to tip your driver from our apps or website. The default tip is 10 percent of your order total, but you may adjust the amount according to your preference. We humbly ask that you tip drivers, as they are critical in making every Drizly delivery a reality." 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, many customers were led to believe that the full amount of the tip they paid was going to the delivery worker who delivered their order.

As part of the settlement, Drizly must pay $4 million in restitution to delivery workers employed by stores that used the Drizly platform. Drizly must also pay an additional $200,000 for a settlement administrator, who will track and disburse the restitution funds to these delivery workers. At least 8,385 delivery workers stand to receive settlement funds from this settlement. In New York City, surveys found that an overwhelming majority of delivery workers are non-white, over 80 percent work full-time as delivery workers, and nearly half are supporting a child or family member on this salary.

Today's settlement continues Attorney General James' fight against wage theft to ensure New Yorkers are receiving their hard-earned money. In September 2024, Attorney General James and U.S. Attorney for the Eastern District of New York Breon Peace secured over $17 million from home health care agencies for cheating workers and defrauding Medicaid. Earlier that month, Attorney General James delivered $750,000 in stolen wages to employees of Best Wireless. In November 2023, Attorney General James secured $328 million from Uber and Lyft for taking earnings from drivers. In October 2022, Attorney General James secured $90,000 in stolen and unpaid wages for Queens laundry workers. In April 2022, Attorney General James recovered $175,000 for employees of Gotham Pizza after the owner failed to pay proper wages.

This matter was handled by Assistant Attorney General Jessica Agarwal with assistance from Legal Assistant Yadira Filpo under the supervision of Civil Enforcement Section Chief Fiona Kaye and Bureau Chief Karen Cacace, all of the Labor Bureau. Former Data Scientist Jasmine McAllister also assisted in this matter, under the supervision of Deputy Director Gautam Sisodia, both of the Research and Analytics Department. The Labor Bureau is a part of the Division for Social Justice, which is led by Chief Deputy Attorney General Meghan Faux and overseen by First Deputy Attorney General Jennifer Levy.