Tips have gone down, but couriers are earning more in hourly pay. | Photo: Shutterstock
A war over tipping on delivery apps is heating up in New York City.
On Tuesday, the city said DoorDash and Uber Eats cost couriers $550 million in tips because of the way tipping is structured in their apps. The apps prompt customers to tip after their order has been delivered, a move designed to ease the total cost of delivery.
The city said this “design trick” has made it harder for consumers to tip.
New York is less than two weeks away from enacting a law that will require delivery apps to ask for tips up front. Last month, DoorDash and Uber sued the city to stop the law.
It is also two weeks into the tenure of progressive Mayor Zohran Mamdani, who is intent on cracking down on delivery apps.
“Under Mayor Mamdani, the biggest corporations in the world will no longer be able to rake in record profits on the backs of workers and consumers,” said Samuel Levine, commissioner of the Department of Consumer and Workforce Protection, in a press release. “If these companies do not follow new tipping laws going into effect later this month, they will face significant consequences.”
In a post on its website Tuesday, DoorDash said many of the city’s claims about its tipping practices are not true. For instance, it argues that there is nothing wrong with asking for tips after service, and points out that this is how tipping usually works.
Uber had not responded to a request for comment as of publication time.
The dispute dates back to December 2023, when the city enacted a minimum hourly wage for delivery workers. Restaurant delivery apps now must pay couriers $21.44 per hour, nearly double their previous average. Courier pay has increased by $1.2 billion since the wage hike went into effect, the city said.
To cover the added costs, delivery apps raised their fees. DoorDash and Uber Eats then moved tipping to post-delivery in an effort to soften the sticker shock for customers. Grubhub, which has a large presence in New York City, still asks for tips ahead of time.
Consumers have responded by tipping less on DoorDash and Uber Eats. The average tip on those apps is now 76 cents, compared to $2.17 on apps that ask for tips up-front, according to a report by the Department of Consumer and Workforce Protection.
All told, tips on DoorDash and Uber Eats have fallen by $554 million since they shifted tipping to after delivery, while tipping on apps that ask in advance has remained steady, the report found.
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