DoorDash and Uber are suing New York City over a new law that will force the delivery apps to ask customers to tip their delivery person up front, instead of after their delivery is completed.
The law, which goes into effect Jan. 26, requires restaurant and grocery delivery apps in the city to add a tip prompt at checkout, with the minimum amount set at 10%.
In the lawsuit filed Thursday, the apps argued that mandating how and when they ask for tips violates their constitutional rights, and that asking customers to tip earlier will make delivery less affordable at a time when money is tight.
The dispute stems from New York’s previous move to mandate an hourly minimum wage for delivery workers. DoorDash and Uber sued to stop that law as well, but they were defeated, and it went into effect in December 2023.
Today, delivery workers are guaranteed $21.44 per hour spent actively delivering, though DoorDash said they make closer to $30, before tips. Prior to the minimum wage law, the city estimated that couriers were earning $11 an hour before tips.
The apps responded to the higher labor costs by hiking their fees. And to ease the sticker shock for customers, they moved the tipping process to after an order was completed.
A report released by the city in July 2024 found that the minimum wage law resulted in significantly higher earnings for couriers and had only a minimal impact on delivery demand. It also found that delivery fees rose 46%, while tip amounts declined by 68%.
The latest lawsuit argues that as New Yorkers’ cost of living grows, and as consumers become more frustrated with tipping practices, adding a more aggressive tip prompt will hurt demand for delivery services.
“To be clear, consumers are still welcome to tip their Dashers in New York City, and are prompted to do so once their order is delivered,” DoorDash said in a press release. “We do not disagree with policies that ensure Dashers are paid fairly. We disagree with policies that unfairly pressure consumers and remove our options to bring balance to the ordering experience.”
Neither Uber nor the city had responded to request for comment as of publication time.
Despite their challenges in New York, DoorDash and Uber Eats have seen growing sales and profits this year as consumers continue to opt for the convenience of delivery, even in a tough economy.
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