The latest report from the New York Department of Consumer and Worker Protection (DCWP) revealed the losses suffered by delivery workers on the UberEats and DoorDash platforms. According to estimates, changing the timing of when customers are asked to leave a tip cost workers $550 million.
In December 2023, minimum wage regulations for delivery workers (currently guaranteeing them $21.44 per hour) took effect in New York. In response to the new regulations, UberEats and DoorDash modified their apps so that the option to add a tip for delivery workers would only appear after the order was placed, not during checkout. In practice, this meant that providing a tip was a separate transaction, requiring re-entering information and accepting payment.
As a result, the average tip dropped dramatically: before the changes, the average tip was $3.66. Just a week after the new payment method was introduced, it dropped to 93 cents. And according to the latest data, the average tip on these apps is just 76 cents. By comparison, platforms that have opted to stick with the old model are reporting average tips of $2.17.
The city administration, led by the new DCWP commissioner, is criticizing the platforms. Officials claim that hiding the tip option is a “massive scheme” aimed at reducing the actual earnings of delivery drivers (in the US, tips are an official part of earnings).
The report’s publication is part of the ongoing legal battle. The platforms have filed lawsuits with the city in an attempt to overturn the new law. Another law is scheduled to take effect on January 26th, forcing apps to reinstate the tip option before or during the transaction. DoorDash and Uber are justifying their lawsuits by claiming that the new regulations constitute a form of “tipping extortion,” which they argue constitutes an additional tax burden on consumers during a cost-of-living crisis.
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