Uber and DoorDash are suing New York City over its Tipping Law, which requires them to offer customers the option to tip at least 10% at checkout — not after an order is paid — claiming that the law exacerbates the city’s affordability crisis and violates the companies’ right to free speech.
“The city compels [Uber and Doordash] to advocate for and implicitly endorse the city’s preferred message — i.e., that New York City customers should tip delivery workers, that they should do so before those workers complete the delivery, and that 10% is an appropriate amount,” the companies allege in a complaint filed in the U.S. District Court for the Southern District of New York. “The Tipping Law unlawfully compels [them] to convey and endorse a message in New York City that they do not communicate now and would not otherwise communicate.”
The Tipping Law was passed in July and takes effect next month. Council Member Shaun Abreu, who sponsored the legislation, said the suit amounts to retaliation against workers.
“Our goal is to protect workers who perform a difficult, valuable service. We won’t stand by while the apps retaliate against workers who organized for a minimum wage,” Abreu said in a statement. “Over 80,000 delivery workers at the core of our food delivery ecosystem take on dangerous conditions using their own personal equipment to bring meals to our doors. If a customer wants to reward that work with a tip, the apps shouldn’t make it harder for them to do so.”
A DoorDash spokesperson accused the City Council of “pressuring customers” to tip and “turning tipping into an added tax,” and said the lawsuit was about “fighting rising costs and ensuring delivery remains fast and affordable for all New Yorkers.”
A spokesperson for Uber did not immediately respond when asked for comment.
The companies argue that the law“constitutes a regulatory taking” of their property rights by controlling how they communicate with customers and that, because they’ve increased delivery fees after laws raising the minimum wage for their workers to $21.44/hour passed, prompting customers to tip before a delivery will “materially impair [their] goodwill, customer demand, business opportunities, and revenue,” because of increased costs to using their platforms and “growing customer tip fatigue.”
The city’s Law Department, which reviews lawsuits against the city, said it is reviewing the suit.
The city’s Department of Consumer and Worker Protection called the suit disappointing, accusing the companies of wanting to hide the option to tip, take away consumer choice and punish workers.
“We are disappointed that, once again, Uber and DoorDash are attempting to limit app-based delivery workers’ right to fair and dignified compensation — now, by seeking to restrict consumers’ ability and choice to decide how and when to tip,” the department said in a statement. “Tipping has always been voluntary, but hiding the option in the app or adding hurdles to the process takes that choice away from consumers and punishes workers by lowering their overall potential earnings.”
Their suit is one of the latest clashes between tech platforms and the New York City government over regulations aimed at increasing worker and consumer protections. Earlier this month, Instacart filed a suit to challenge Local Law 124, which increases the minimum wage for grocery delivery workers to $21.44/hour and requires the company to pay workers for time they spend “on call,” not just time they physically spend delivering groceries. Uber and DoorDash have also sued the city repeatedly in recent years over minimum wage increases.
Additionally, in October of this year, the city sued a slew of big tech companies, including Meta, Google, Snap and ByteDance, arguing that their platforms — Instagram, Facebook, Snapchat, YouTube and TikTok — are fueling a youth mental health crisis. It argues that in “deliberately” trying to maximize youth engagement, it caused young people to become addicted to the platforms and are therefore liable to pay for counseling and other resources in schools to address the issues they’ve caused. The suit is currently in the pre-trial phase.
