Listen to this articleA now-defunct alcohol-delivery platform has reached a settlement with the New York Attorney General’s office, and will pay $4 million in restitution to delivery workers who had not received their full tips.
New York Attorney General Letita James said that the company, Drizly, had led customers to believe that the entirety of their tips would go directly to delivery workers who had earned them, but did not ensure that store owners – including 508 on Long Island – properly distributed the tips.
Officials say that Drizly actively encouraged customers to leave tips for delivery workers, including through an automatic 10% tip at checkout. Instead, the tips went to store owners for distribution.
Liquor stores using Drizly could either outsource deliveries or employ their own delivery workers, officials said. For store-employed delivery workers, including more than 8,300 workers at 2,453 stores across New York state, Drizly sent the tips to the store owners, who then decided how to distribute the tips.
“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,” James said in a news release about the settlement.
“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,” she added. “Now, we are finally returning this money to those who actually deserve it and who customers intended it would go to.”
Drizly began operations in New York in 2013 and was acquired in 2021 by Uber, which shut it down in March 2024 after consolidating its food and alcohol delivery services into Uber Eats, according to officials.
As of August 2023, more than 80% of Drizly orders were delivered by store employees, who did not automatically receive their earned tips through the Drizly app, officials said.
In addition, Drizly also encouraged liquor stores to pool 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, the AG’s office said. Yet, Drizly continued to encourage tip pooling and did not implement any mechanism to ensure the delivery workers received the money intended for them.
Drizly must also pay an additional $200,000 for a settlement administrator, who will track and disburse the restitution funds to the delivery workers.