A DoorDash and Uber minimum wage ruling is leading to both companies implementing changes that are badly hurting the income their drivers receive from tips …
Food delivery companies like Uber, DoorDash, and GrubHub have always maintained that their drivers and riders are self-employed, not employees. That, they argue, means that they are not obligated to pay minimum wage.
New York disagreed, and this month implemented a ruling which says that these companies must ensure their drivers receive at least minimum wage, of $17.96 per hour.
But Crains New York reports drivers complaining that both Uber and DoorDash have responded by making a change which drastically reduces their income from tips.
Previously, customers had to specify the tip they planned to pay at the point of placing an order. Drivers could see the tip amount, and prioritize the jobs offering the highest amounts. The result was that, if you wanted a fast delivery, you needed to offer a generous tip.
Now that the minimum wage ruling has kicked in, however, both companies have changed the system, so that customers choose their tip after the order has been delivered. That change means they are offering much lower tips.
Both companies say that the minimum wage law increases their costs, which they have to pass on to customers in the form of higher fees. The only way they can keep the total cost affordable, they say, is to effectively support customers in paying lower tips.
Tips, which used to account for as much as half of drivers’ total weekly earnings, now make up only 5%-15%, according to the pay stubs of some drivers under the new model. Drivers reported getting more orders that had no tips, even as their overall earnings have increased. Uber added a $2 fee to all delivery orders and informs customers that “tipping remains optional.” DoorDash is planning to increase fees in the coming months […]
Prior to the minimum wage rule, delivery app workers took home $11.12 per hour with tips, or $4.03 per hour without, according to a 2022 report by the city to inform the calculation of the new pay level.
Top comment by Povie Tam
In virtually every other food industry, you pay for the service you’ve received not for the service you might get. These companies have subverted what tipping is actually for, assuring that you get good service.
I’m fine with this. Having to tip more for priority delivery is essentially blackmail. Pay these people a livable wage and these problems will disappear.
DoorDash said this move should come as no surprise.
“Policies have consequences, and these changes come as a direct result of the extreme earnings standard imposed in New York City,” said DoorDash spokesperson Eli Scheinholtz. “The city itself acknowledged that platforms could make changes to our tipping structure to help meet the significantly increased costs, which is exactly what we’re doing and therefore should come as no surprise.”
But drivers see it as retaliation, intended to deter workers in other states from pushing for similar legislation.
Some drivers see the changes, such as the tip prompt, as a form of retaliation by the companies, said Josh Wood, an Uber Eats driver who is also an organizer for Los Deliveristas Unidos, the workers group that pushed for the minimum wage rule. “It does dampen the effect of this minimum wage that we fought so hard to achieve, as it’s calculated based on the assumption that tips don’t change.”
9to5Mac’s Take
Arguments can be made on both side regarding whether these type of gig workers should receive the same protections as permanent employees, but when companies like this are paying just four dollars an hour – and describe a requirement to pay minimum wage as “extreme” – something is very wrong.
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