New York City Mayor Zohran Mamdani criticized DoorDash CEO Tony Xu for the company’s use of what he called a “greedy algorithm” while announcing a $131 million settlement with DoorDash. This settlement addresses allegations that the company withheld tips from its delivery drivers.

Mamdani referenced Xu’s comments made on a podcast in July, describing a greedy algorithm in computer science as one that makes the most optimized, short-term choices without considering long-term consequences. Mamdani noted that New York City and its large population of delivery workers have suffered from this business approach. He stated, “Thousands of them deliver for DoorDash, and thousands of them have felt the human cost of the greedy algorithm.”

“In computer science, a greedy algorithm is one that makes the most optimized, best short-term outcome choice at every step and never weighs the consequences,” Mamdani said.

At a news conference, Mamdani announced that the city’s Department of Consumer and Worker Protection found DoorDash systematically underpaying delivery drivers, leading to the historic settlement. Out of the total amount, $115 million is designated for compensation to the workers, with individual payments potentially reaching $5,000. The remainder will cover fines and the creation of software to record and share payment data with the city.

This new software will allow workers to crowdsource data and better understand the algorithms affecting their pay and schedules. As part of the settlement, DoorDash must also submit delivery worker payment data to the city regularly for the next three years.

DoorDash acknowledged underpaying workers, stating the actions were unintentional: “Simply put, we screwed up,” the company commented. They emphasized their commitment to ensuring Dashers are paid on time and fully.

“We pride ourselves on operational excellence at DoorDash – and this was not excellent, nor was it acceptable,” DoorDash said.

Mamdani, however, contested that the underpayments were accidental. He argued, “For years, DoorDash failed to count every hour worked by delivery workers.” He mentioned issues with how time was calculated, particularly time on canceled trips or trips crossing city limits.

This settlement with DoorDash follows Mamdani’s previous actions against other food delivery firms. In January, he announced a $5 million settlement with companies, including Uber Eats, for minimum wage violations. In April, a settlement of $875,000 was secured with HungryPanda over illegal fees charged to businesses.