A federal judge on Friday declined to strike down a New York City law that requires food delivery apps such as Uber Eats and DoorDash to provide customers a tipping option before checkout.
The ruling by a Manhattan federal judge means that the city ordinance is set to take effect on Monday.
The new law forces delivery apps to prompt customers to tip before checkout, with a default suggestion of at least 10%. City officials say the change is needed to protect workers’ earnings after tips plunged when a new minimum wage law went into effect in late 2023.
The minimum hourly pay rate for app-based delivery workers required companies like Uber and DoorDash to raise pay to $21.44 an hour before tips. City officials say the policy dramatically boosted earnings, estimating it increased delivery worker pay by about $1.2 billion overall.
But the law also triggered backlash from delivery companies, which raised fees and warned it would distort the economics of app-based delivery.
Regulators said the law quietly led DoorDash and Uber to change their tipping systems in ways the city says wiped out hundreds of millions of dollars in gratuities.
Uber and DoorDash argue the new tipping law effectively strong-arms customers into tipping upfront, undermining the traditional idea of a gratuity as a reward for good service.
Critics say pre-tipping functions less like a thank-you and more like a requirement to secure delivery at all, since drivers can see the expected payout before accepting an order and routinely skip low- or no-tip jobs.In practice, customers who decline to tip upfront risk long delays or canceled orders.
The concern is central to the lawsuit filed by DoorDash and Uber, which accuses the city of forcing companies to pressure customers on the government’s behalf.
The companies warn the system fuels resentment, tipping fatigue and higher prices — while distorting the relationship between customers and workers. City officials counter that app companies deliberately caused the problem.
A January report from the Department of Consumer and Worker Protection alleges DoorDash and Uber redesigned their apps after the city imposed a minimum wage in late 2023, shifting tipping to after delivery and triggering an estimated $550 million drop in worker tips.
Credit: Source link
