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A now-defunct alcohol delivery platform has reached a settlement with the New York attorney general’s office and will pay $4 million in compensation to delivery workers who didn’t receive their full tips.

New York Attorney General Letita James said the Drizly company led customers to believe that all of their tips would go directly to the delivery workers who earned them, but failed to ensure that store owners stores – including 508 on Long Island – are correctly informed. distributed tips.

Officials say Drizly actively encouraged customers to tip delivery drivers, including through an automatic 10% tip at checkout. Instead, tips were sent to store owners for distribution.

Liquor stores using Drizly could either outsource deliveries or employ their own delivery drivers, officials said. For in-store delivery workers, including more than 8,300 employees at 2,453 stores in New York state, Drizly sent the tips to store owners, who then decided how to distribute them.

“Drizly misled its customers by encouraging them to tip, then failing to ensure those tips went to the delivery drivers who earned them,” James said in a press release about the settlement.

“So many delivery workers work paycheck to paycheck and denying them their hard-earned tips could be the difference between making ends meet and not being able to put food on the table,” she added. “Now we’re finally giving that money back to those who actually deserve it and who customers wanted it to go to. »

Drizly began operating in New York in 2013 and was acquired in 2021 by Uber, which shuttered it 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 tips earned through the Drizly app, officials said.

Additionally, Drizly also encouraged liquor stores to pool tips among all employees rather than giving them directly to the workers who earned them, an illegal practice for liquor store employees in New York. the AG’s office said. Yet Drizly continued to encourage tip pooling and did not put in place any mechanisms to ensure that 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 restitution funds to delivery workers.