DoorDash and Uber Eats prevented delivery workers from earning over $550 million in tips by requiring customers to leave gratuities after checkout, the Mamdani administration alleged Tuesday.
The tipping policy – which the food-delivery apps launched in December 2023 as New York City began hiking minimum pay for that workforce – has resulted in an estimated $5,800 annual loss in tips per worker, New York City’s Department of Consumer and Worker Protection said in a new report.
In the week after the new tipping system was rolled out, the average tip for Uber Eats and DoorDash drivers plummeted from $3.66 per delivery to 93 cents, according to the DCWP. It has since dropped to 76 cents, the department found.
It said drivers for rival apps like GrubHub, which allow customers to give tips before checkout, earn an average gratuity of $2.17.
DCWP Commissioner Samuel Levine said Tuesday’s report “blows the whistle on a massive scheme by Uber and DoorDash to drive down worker pay.”
John Horton, DoorDash’s head of North America public policy, said the report’s claims “are flat out wrong.” Uber Eats did not immediately respond to noti.group’s request for comment.
The apps – two of the world’s largest food-delivery companies – introduced the after-checkout system the same day New York City mandated annual inflation-adjusted pay hikes for app-based delivery workers. It currently stands at $21.44 an hour.
Since the start of December 2023, shares in DoorDash and Uber have risen about 125% and 50%, respectively.
The companies are currently in a legal battle with the Big Apple over new laws set to take effect Jan. 26 that require the apps to offer customers the chance to leave tips at checkout and set the default option to at least 10% of an order’s cost.
Uber Eats and DoorDash are asking the Southern District of New York to block the legislation, accusing the city of violating their free speech rights by forcing them to “speak a government-mandated message in a prescribed manner and at a prescribed time.”
The city has rejected the claims, with DCWP filing a memorandum earlier this month to prevent the apps from getting the new laws tossed out.
Federal Judge George Daniels has not yet ruled on Uber Eats and Doordash’s request. The case’s next hearing is slated for Wednesday.
In the lawsuit, Uber Eats and DoorDash claimed the new minimum pay requirements have made New York City food deliveries more expensive and argued the new laws – combined with “tipping fatigue” and “generally rising prices” – will hurt their bottom lines.
They also likened strict tipping requirements to a tax on consumers.
“In the midst of an affordability crisis, the New York City Council has turned tipping into essentially an added tax by forcing platforms like DoorDash to pressure consumers to tip at checkout,” DoorDash said in a December statement.
NYC Council Member Shaun Abreu, a Manhattan Dem who’s the lead sponsor for the new tipping law, asserted: “If someone wants to tip them, they shouldn’t have a hard time doing it.”
“No one is ever forced to tip, and making it more difficult to do so is plain wrong,” he said in a statement. “When corporations claim that delivery workers are overpaid and app profits are too low, we know they are lying.”
The department’s 2022 study on a higher minimum pay rate states that worker pay is only one of several factors that influence app expenses and consumer costs.
While it’s not necessarily phrased as a suggestion, the study does state: “Apps could choose to reduce consumers’ costs through changes to the user interface that discourage or eliminate tipping.”
“Moving tipping to after checkout isn’t novel or nefarious – it’s how tipping works in many areas of life,” DoorDash’s Horton told The Post.
[Notigroup Newsroom in collaboration with other media outlets, with information from the following sources]
