NEW YORK (BLOOMBERG) — DoorDash Inc. and Uber Technologies Inc. have deprived New York delivery workers of more than $550 million in tips after changing the interfaces on their apps, according to findings released in a report from a city agency.
Mayor Zohran Mamdani’s administration said the companies moved tipping prompts to less prominent locations in their apps after new pay standards for delivery workers took effect in December 2023. At the time, the apps raised customers’ service fees to subsidize the new pay rate and moved the in-app tipping function to after checkout so that the upfront delivery costs would seem lower.
A spokesperson for DoorDash called the Department of Consumer and Worker Protection report “flat out wrong,” adding that their delivery workers always recieve 100% of tips placed through the app.
“Moving tipping to after checkout isn’t novel or nefarious – it’s how tipping works in many areas of life,” John Horton, the company’s head of North America public policy, said in an emailed statement. “Forcing people to tip may as well be a tax. It should be up to consumers, not politicians, whether they want to tip more in New York after already paying for a billion dollar raise for workers.”
A representative for Uber did not immediately reply to a request for comment.
Over the course of 18 months, the shift resulted in a $554 million loss in tip income — or roughly $5,800 per worker annually.
Photo credit Bloomberg
Average tips on both platforms fell to $0.93 per delivery from $3.66 within a week of the adjustments, the report released Tuesday said. Over the course of 18 months, the shift resulted in a $554 million loss in tip income — or roughly $5,800 per worker annually.
Mamdani had campaigned during his mayoral run for better working conditions and treatment of delivery workers. After he took office earlier this month, he signed an executive order that cracked down on junk fees and misleading subscriptions in an event that named Uber and DoorDash as culprits.
His push builds on a string of labor changes enacted under the administration of former mayor Eric Adams that were designed to support delivery workers. That includes new amendments to the city’s delivery worker laws which require apps to provide more prominent tipping options, including allowing customers to tip during checkout and offering a selectable 10% tip suggestion.
DoorDash and Uber jointly sued the city to block the requirements — which are scheduled to take effect on Jan. 26 — arguing they violate their free speech rights under the First Amendment. The laws force them to “advocate for and implicitly endorse the city’s preferred message,” the companies said in their complaint at the time.
Featured Image Photo Credit: Yuki Iwamura/Bloomberg