Uber might finally have to give in on tipping.
What’s one problem Uber has that’s just the usual level of upsetting, and not totally horrifying? Tipping.
The ride-hailing giant has for years stood strong against letting customers tip their Uber drivers within the Uber app. Lyft started letting riders tip their drivers in 2012, and Uber still hasn’t gotten on board. The issue has been one of the stickiest for Uber’s fraught relations with its drivers.
Uber might finally be forced to change its tune after New York City’s Taxi and Limousine Commission introduced a proposal this week that would require ride-hailing companies operating in the city to allow riders to tip their drivers. The need to follow a rule like that in one of Uber’s biggest and most important markets could force the company to allow tipping across the country or around the world.
Uber’s history with tipping has been around since its early days and goes all the way to the top. According to the New York Times, Uber CEO Travis Kalanick personally opposes tipping. Kalanick reportedly thinks that a tipping feature could make Uber somehow less appealing or make people who don’t tip their drivers feel guilty. A tipping tool for Uber is reportedly already built and ready to go, but hasn’t been introduced.
The lack of a tipping feature also points to the company’s broader issue with its drivers. Uber drivers are technically contractors, not employees, meaning they work for themselves. For Uber, there’s only downside in including tipping since it would make trip more expensive without any of that money going to the company (unless it started taking a cut…).
The issue was serious enough that it went to court, where a major settlement Uber reached last year in a class-action lawsuit brought by drivers almost required the company to move forward on tipping by telling customers that their fares didn’t include tip. But that settlement was later rejected by a judge.
Not allowing riders to tip their drivers in-app contributed to the perception of Uber as the unfeeling, win-at-all-costs player in ride-hailing, particularly compared to Lyft, which passed the milestone of $200 million awarded in tips in March. And of course there’s regular taxi cabs, which have allowed tipping forever. Riders can technically tip their Uber drivers with cash, but since they’re never paying for the ride with cash, it’s confusing.
“We have not seen the proposal and look forward to reviewing it," Uber said in a statement. "Uber is always striving to offer the best earning opportunity for drivers and we are constantly working to improve the driver experience. That’s why, in New York City, we partnered with the Machinists Union to make sure current and future Uber NYC drivers have a stronger voice and launched a series of new tools and support policies for drivers.”
The Independent Drivers Guild lobbied for the New York proposal, which it estimates will lead to over $300 million per year in tips for New York drivers.
“Today’s decision is a vitally important step forward for drivers. In-app tipping will mean a raise of hundreds of millions of dollars for New York City drivers each year,” Independent Drivers Guild founder Jim Conigliaro Jr. said in a statement.
Lyft, for its part, claimed the moral high ground in this debate.
"We’ve always known that offering in-app tipping is the right thing to do, which is why we’ve done so since our earliest days. It’s a big reason why the vast majority of drivers prefer Lyft," Lyft spokesman Adrian Durbin said.
While Uber once thrived on its image as the aggressive leader in ride-hailing, the take-no-prisoners approach isn’t as appealing anymore (a sexual harassment scandal and a video of your CEO berating an Uber driver will do that).
The New York rule must be approved by the taxi commission’s board before it takes effect, which could happen in July.