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New York City May Force Uber to Add a Tipping Option to Its App

A sign marks a pickup point for the Uber car service at LaGuardia Airport in New York.

A sign marks a pickup point for the Uber car service at LaGuardia Airport in New York. Seth Wenig / AP Photo

 

Connecting state and local government leaders

Drivers in New York could reasonably expect another $4 to $6 an hour.

Uber’s days without tipping are numbered in New York City.

The Taxi and Limousine Commission (TLC), the local taxi regulator, said today that it plans to sketch out rules on tipping options in the for-hire vehicle industry. The TLC said it will work off a petition presented in February by the Independent Drivers Guild, a non-union group that represents Uber drivers and other professional drivers in the city. The guild proposed requiring all ride-hailing companies to include a tipping option in their apps.

While the TLC has been careful not to name specific companies, the guild clearly designed its rule with Uber in mind. Uber is unique among ride-hailing companies in its total disdain for in-app tipping. Uber competitor Lyft and local ride-hailing startup Juno both have tipping options in their apps. Uber initially claimed riders didn’t need to tip because gratuities were built into its fares, but admitted in a proposed class-action settlement last year that, actually, they weren’t. Rather than create a tipping option in the app, Uber then told riders who wished to tip that they could do so in cash.

Tipping can be an important income stream for a professional driver. As we’ve explained previously, the living wage in New York for a family with two children and two working adults is $19.01 an hour. The average UberX driver in the state earned between $23 and $24.50 an hour in October 2015, but after expenses like gas and car insurance, the typical driver in New York was left with a bit more than $19 an hour.

If Uber offered a tipping prompt in its app, drivers in New York could reasonably expect another $4 to $6 an hour—a 21% to 32% increase over $19. That’s based on the two to three trips per hour made by the typical Uber driver and the tipping behavior of passengers in New York’s yellow cabs, where 97% of customers who rode solo and paid by credit card followed prompts to add a tip to their receipt and left a median tip of $2 in the first half of 2015.

The TLC’s action on tipping rules comes after the commission held its biannual hearing on for-hire driver earnings earlier this month. The hearing lasted six hours; 82 people testified. Low pay was a common theme among drivers, as was Uber’s manipulation of fare prices. Driver testimonies were punctuated by choruses of “Uber sucks.”

“This rule proposal will be an important first step to improve earning potential in the for-hire vehicle industry,” Meera Joshi, the taxi commissioner, said in a statement today. “But it is just one piece of a more comprehensive effort to improve the economic well-being of drivers.” The taxi commission plans to propose its rules on tipping by July, a spokeswoman told Quartz.

Uber said in a statement that it looks forward to reviewing the TLC’s proposal. “Uber is always striving to offer the best earning opportunity for drivers,” the company said, “and we are constantly working to improve the driver experience.”

Alison Griswold is a reporter at Quartz, where this article was originally published.

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