Customers using DoorDash (NYSE:DASH) and Uber Eats (NYSE:UBER) in New York City received a jolt this week. The popular delivery platforms have ceased tipping at checkout and introduced additional charges.
What Happened: Business Insider reported on Dec. 6, 2023, that New York City-based users of DoorDash and Uber Eats were surprised to find they could no longer tip their delivery personnel at checkout. Additionally, their final bills included a new surcharge, making their orders more expensive.
This change is a direct response to the new minimum wage regulations in New York City, which mandate a minimum pay of $17.96 per hour for drivers. This rule, which the delivery companies unsuccessfully attempted to block, has compelled them to alter their tipping and fee structures.
As a result, customers in NYC can now only tip their delivery drivers after their order has been picked up or completed.
DoorDash and Uber Eats, in justifying the additional costs passed on to customers, stated that the new minimum wage regulations left them with no alternative.
“These new regulations will force us to raise fees for orders in New York City,” DoorDash explained.
Meanwhile, the DoorDash drivers in NYC are now being paid $29.93 per “active” hour, which excludes the time spent waiting for new orders. Uber Eats has also followed suit by eliminating upfront tipping and allowing tipping only after the delivery has been made.
However, the NYC Consumer and Worker Protection Department (DCWP) refuted this, asserting that it was solely the business decision of Uber and DoorDash.
Both DoorDash and Uber Eats are also introducing new service fees, further increasing the cost of orders in New York City.
Why It Matters: These changes are a significant departure from the previous stance of the delivery platforms, where tipping at checkout was strongly encouraged. For instance, in June, DoorDash began sending tip “nudges” to customers, prompting them to increase tips within 30 days after a delivery. In November, the company even cautioned that no-tip orders could lead to slower food deliveries.
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