New Yorkers will be asked to tip their delivery person ahead of time. | Photo: Shutterstock
New Yorkers will notice a change in their DoorDash and Uber Eats apps on Monday. That’s when a new law goes into effect requiring food delivery apps to ask customers to tip their delivery person at checkout, rather than after their order has been delivered, with a minimum suggested tip of 10%.
A U.S. district judge on Thursday struck down a motion by DoorDash and Uber to temporarily pause the law. Judge George Daniels ruled that a lawsuit filed in December by the two apps raised “important constitutional questions,” but was not strong enough to warrant a preliminary injunction. The case will continue even as the law takes hold.
The law is intended to boost workers’ pay and give customers “the option to tip freely,” the city said in a statement Friday.
A DoorDash spokesperson said Friday that New York restaurants “will likely see an immediate drop off in orders” as a result of the law.
“Forcing platforms to solicit a tip before checkout at a time when New Yorkers are sick of tipping culture and facing a growing affordability crisis is bad policy—plain and simple,” the spokesperson said. “We’re disappointed in this ruling, but are confident in our position and will continue working to prevent further losses for local businesses and higher costs for consumers.”
Uber had not responded to a request for comment as of publication time.
The dispute stems from New York City’s mandatory minimum hourly wage for delivery workers that went into effect in late 2023. Delivery apps responded to the added costs by hiking their delivery fees, and DoorDash and Uber Eats moved the tip screen to post-delivery in an effort to ease the sticker shock for consumers. Grubhub, which has a large market share in New York City, continued to ask for tips up front.
That seemingly small change apparently had a big impact on consumers’ tipping behavior. According to a report by the city’s Department of Consumer and Workforce Protection, the average tip on DoorDash and Uber Eats is now 76 cents, compared to $2.17 on apps that did not change their tipping policy. It concluded that DoorDash and Uber Eats couriers have missed out on $550 million in tips as a result.
But overall, New York delivery workers’ earnings have improved considerably under the new minimum wage requirement. Their pay has increased by $1.2 billion since it went into effect, the city said. DoorDash said couriers now earn more than $30 per hour while on delivery, which it said is more than many first responders in the city. That’s before tips.
Delivery apps are facing more scrutiny over their business models. Consumers and restaurants alike have complained that the cost of the service is untenable. Half of restaurants say that high third-party delivery fees are the No. 1 obstacle to growing their off-premise business, far more than any other issue, according to a new Market Leader Report from Restaurant Business and Nation’s Restaurant News.
Nonetheless, DoorDash and Uber Eats revenue continues to increase quarter after quarter, and the apps have even turned a profit recently after many years of losing money.
But they have faced challenges in New York City, the nation’s largest restaurant market. It is one of the few places in the U.S. where delivery apps are required to pay an hourly minimum wage, for instance. And newly elected Mayor Zohran Mamdani appears intent on continuing the city’s aggressive stance toward delivery companies.
DoorDash stock was up less than 1% on Friday afternoon, while Uber’s was down less than 1%.
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