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MARKETANALYST.US / ECONOMY & WORK

NYC Councilman Proposes Fair Tips Bill Amid Allegations of Delivery Apps Retaliating Over Wage Hike

The bill aims at compelling delivery apps to prominently feature tipping options at the forefront, with a default tipping rate of 10% for customers.
PUBLISHED APR 12, 2024
Cover Image Source: A Doordash delivery person rides their bike | Getty Images | Photo by Michael M. Santiago
Cover Image Source: A Doordash delivery person rides their bike | Getty Images | Photo by Michael M. Santiago

With the recent increase in New York's minimum wage for tipped workers, NYC Councilman Shaun Abreu (D-Manhattan) has voiced concerns over its adverse effects, particularly for delivery personnel. Abreu has proposed a bill aimed at compelling delivery apps to prominently feature tipping options at the forefront, with a default tipping rate of 10% for customers. He asserts that these apps are depriving workers of their rightful tips, as they now earn considerably less following the implementation of the new wage policy.

A Grubhub delivery person rides a bicycle in the snow | Getty Images | Photo by Noam Galai
Image Source: A Grubhub delivery person rides a bicycle in the snow | Getty Images | Photo by Noam Galai

The recent wage hike legislation was initially celebrated as a significant victory for workers and delivery personnel across New York City. However, according to Abreu's statements to Fox5, the requirement for employers to provide a specified wage has led delivery platforms to retaliate by removing tipping options from their platforms.

Image Source: Unsplash | Photo by Sam Dan Truong
Image Source: Unsplash | Photo by Sam Dan Truong

As a consequence of the law, workers are now experiencing a decrease in their tip earnings. According to a report by Fox5, app-based food delivery workers were earning $19.56 per hour as of last week. While the wage increase was welcomed by workers advocating for higher pay, the removal of tipping options has had a negative impact.

"When the minimum wage went into effect, tipping options were removed at checkout. Apps like DoorDash and Uber only allow tipping after the meal is completed, which we see as a disincentive and discouragement for tipping," explained Abreu.

According to a New York Post report, the councilman emphasized that the legislation aims to reinstate tipping options to their previous state, highlighting that customers are more likely to tip when presented with the option before receiving their meal.



Delivery worker Sebastian Garcia expressed concern over reduced earnings. Speaking to Fox5, Garcia revealed that on a recent day working from 6 am to 3 pm, he only earned $63, with tips amounting to just $3. Previously, he would receive tips ranging from $10 to $15 per delivery.

Meanwhile, Abreu clarified that the minimum wage applies solely to active delivery workers. This means that workers do not receive payment while awaiting orders, and the minimum wage is applicable only during active delivery hours. "So it's not necessarily true that people are earning the minimum wage hourly," he explained.

Regarding DoorDash's changes to the tipping system last December, Abreu mentioned that the option to tip after checkout was implemented. The platform stated that this adjustment aimed to better balance "the impact" of new costs, and it was recommended by the NYC Department of Consumer and Worker Protection.



Earlier this month, California raised the minimum wage for fast-food workers to $20 per hour, increasing their pay by 25% from the state’s $16 minimum wage for other sectors. While this move helped over 500,000 workers in the state, critics argued that the mandate has put businesses under pressure.



Furthermore, fast-food chains have increased menu prices, laid off thousands of employees, and put a halt on hiring to offset the added labor costs. "The new law could increase the cost of doing business in the state and increase the unemployment rate for the long term," economist Scott Sumner told Fortune.

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