NYC Claims DoorDash & Uber Eats Cost Drivers $550M in Tips
New York City officials are accusing DoorDash and Uber Eats of costing delivery workers more than $550 million in tips by changing how customers are asked to tip, a move the city says quietly slashed workers’ earnings just as new pay rules went into effect.
According to a new report released by the city’s Department of Consumer and Worker Protection (DCWP), the two delivery giants shifted tipping to after checkout in December 2023, right when New York began raising minimum pay for app-based delivery workers. City officials argue that this timing was no coincidence and that it had a devastating impact on tips.
The report estimates that delivery workers lost an average of $5,800 per year in tips as a result of the change.
Tips Plunged Almost Overnight
The numbers laid out by the city are stark. Before the new tipping system was introduced, the average tip on DoorDash and Uber Eats was $3.66 per delivery. Within a week of the change, that number dropped to 93 cents. Since then, it has fallen even further, to just 76 cents per delivery.
By comparison, delivery workers on apps like Grubhub, which still allow customers to tip before checkout, earn an average of $2.17 per delivery in tips.
DCWP Commissioner Samuel Levine didn’t mince words, calling the policy change a deliberate attempt to push worker pay down.
“This report blows the whistle on a massive scheme by Uber and DoorDash to drive down worker pay,” Levine said.
Apps Deny Allegations as Stocks Surge
DoorDash and Uber Eats strongly reject the city’s claims.
John Horton, DoorDash’s head of North America public policy, called the report “flat out wrong,” arguing that moving tipping to after checkout is neither unusual nor harmful.
“Moving tipping to after checkout isn’t novel or nefarious it’s how tipping works in many areas of life,” Horton said. Uber Eats did not immediately respond to requests for comment.
Despite the controversy, both companies have seen major financial gains since the policy change. Since December 2023, DoorDash shares are up about 125%, while Uber stock has risen roughly 50%.
Minimum Pay Increase Sparked the Fight
The tipping change happened the same day New York City implemented a new, inflation-adjusted minimum pay rate for app-based delivery workers. That rate now stands at $21.44 an hour.
City officials argue that instead of absorbing higher labor costs, DoorDash and Uber Eats quietly reworked their apps in a way that discouraged tipping, shifting the burden onto workers.
The DCWP report suggests that tipping behavior is heavily influenced by when customers are prompted to tip. When tipping is optional and placed after checkout, many customers skip it altogether.
Legal Battle Looms Over New Tipping Law
The dispute is now playing out in court.
New York City passed new laws that are set to take effect on January 26, requiring delivery apps to:
- Offer tipping at checkout
- Set the default tip option to at least 10% of the order
DoorDash and Uber Eats are fighting the law, asking a federal court to block it. They argue that the city is violating their free speech rights by forcing them to present tipping prompts in a specific way.
The companies claim the rules would increase costs for consumers during an affordability crisis and compare mandatory tip prompts to an added tax.
“In the midst of an affordability crisis, the New York City Council has turned tipping into essentially an added tax,” DoorDash said in a previous statement.
The city strongly disagrees and has filed legal arguments urging the court to uphold the law. A federal judge has not yet ruled, and the next hearing is scheduled for Wednesday.
City Officials Push Back
City leaders say the law is about fairness, not forcing tips.
Manhattan City Council Member Shaun Abreu, who sponsored the legislation, said customers should not be pressured, but they also shouldn’t be blocked from tipping easily.
“If someone wants to tip, they shouldn’t have a hard time doing it,” Abreu said. “No one is ever forced to tip, and making it more difficult to do so is plain wrong.”
Abreu also dismissed claims that delivery workers are overpaid or that app companies are struggling financially.
“When corporations claim that delivery workers are overpaid and app profits are too low, we know they are lying,” he said.
Bigger Questions About Worker Pay
The city’s report also points to earlier studies showing that worker pay is only one factor influencing delivery costs. A 2022 city study even suggested that apps could reduce consumer costs by discouraging tipping — language that DoorDash now cites as proof its actions were allowed.
Still, city officials argue that discouraging tips while publicly promoting worker pay increases is misleading.
For delivery workers, the issue is personal. Many rely on tips to cover basic expenses, especially as gas, food, and rent costs continue to rise.
As the legal battle moves forward, the outcome could reshape how tipping works not just in New York, but nationwide and determine whether delivery workers regain hundreds of millions of dollars they say were quietly taken from them.
For now, the fight between City Hall and Silicon Valley is far from over and delivery workers remain caught in the middle.
