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New York City moves to allow passengers to tip Uber drivers

A rule from the Taxi and Limousine Commission would force Uber to let its riders offer cashless tips

Financial trends and news by Steven Loeb
April 17, 2017
Short URL: http://vator.tv/n/4964

There are many reasons that riders might choose either Lyft over Uber.

Some people are still upset that CEO Travis Kalanick was an advisor to President Trump, even though he unfortunately quit following public backlash and even though his worldview or politics shouldn't be impugned by people who clearly have no real cause to fight for. Users might also be mad at Uber for the recent allegations of sexual harassment at the company, a more substantive and serious issue, and one that has recently been causing some very bad headlines. 

For me, the choice between the two companies comes down to one feature: tipping. Lyft allows its riders to very easily give their drivers a couple extra bucks for their trouble. Uber, on the other hand, does not do that. For that reason, I typically go with Lyft.

That may be changing soon, though. The Taxi and Limousine Commission in New York City announced on Monday that it intends to initate a new rule, which would require that For-Hire Vehicles that accept only credit cards, such as Uber, allow passengers to tip their driver using their card.

The proposed rules, which will be introduced in the coming months, will require for-hire vehicle bases, such as black car, livery car, and luxury limousine bases, to allow passengers to tip drivers using one of the methods of payments they can use to pay for the fare.

If a company allows passengers to only pay for a fare using a credit card, the passenger must be able to tip the driver using a credit card.  If a company only accepts cash, they would only be required to permit tipping in cash.

While the proposal won't be aimed specifically at Uber, it would certainly be the company most directly affected if it were to go through.

It's also telling where this idea originally came from: a petition, entitled "Tell Uber: add an easy option for tips," which the TLC received in February. The petition was created by the Independent Drivers Guild, a group representing Uber drivers in New York, and it got over 11,000 signatures, though it still is about 1,800 away from its goal of 12,800.

The Commission also says it held a six-hour long hearing in April, where more than 80 speakers testified about working in the For-Hire Vehicle space, including declining incomes and a lack of pay transparency. All of this is what prompted this proposal.

A big part of what the TLC is doing, a spokesperson for the Taxi and Limousine Commission told me, has to do with price transparency for drivers.

"Rulemaking on tipping is a first step in a larger process to bring some of the income protections provided to yellow taxi drivers to the for-hire world. In the medallion taxi industry, the TLC is able to protect what part of the fare the driver is entitled to and specific rules about what additional costs can and cannot be deducted from the fare," the spokesperson said.

"The work ahead for the TLC is to provide more transparency  for drivers on how their earnings are calculated, to provide earning protections and a means of redress for those that are making less than a livable wage. Regardless if they are in a yellow taxi or an FHV, TLC-licensed drivers should, at a minimum, know what they are paid and how their pay is calculated.  We anticipate developing driver protections tailored to the many variables of the for-hire world."

An Uber spokesperson told VatorNews that it not yet seen the proposal but that it did "look forward to reviewing it" once it did. 

"Uber is always striving to offer the best earning opportunity for drivers and we are constantly working to improve the driver experience. That’s why, in New York City, we partnered with the Machinists Union to make sure current and future Uber NYC drivers have a stronger voice and launched a series of new tools and support policies for drivers," the company said.

There are still numerous steps that have to be taken before any of this will become official. Once the TLC decides to initiate rule making, it will draft the rule package, which then must be certified by the NYC Law Department. After that, the TLC has to publish the rule, and allow comment from the public for 30 days. 

There will also be hearings and votes, and even if it does pass it won't go into effect for another 30 days after that. So it is going to be a while before anyone has the ability to tip their Uber driver.

Tipping on Uber

Tipping on Uber has always been a bit of a touchy subject. While tipping was always allowed, the company also discouraged the practice. with the promise that it was already included in the fare.

That turned out to be false, and was part of a class action lawsuit brought against the company by its drivers in California and Massachusetts.

While Uber settled in April of last year, in order for drivers to remain independent contractors, the company was forced to pay out $84 million to the approximately 385,000 drivers represented in the suit. It will have to pay another $16 million if it goes public and hits a certain valuation.

More importantly, Uber also agreed to a number of concessions, including new specific policies designed to give drivers greater transparency about what keeps them in good standing and what could boot them off the platform. That included clarifications regarding tipping.

In a post on Medium, Uber stated its reasons for not wanting to include tipping in the experience, including not wanting to incentivize drivers to go where tips would be highest. It also mentioned the possibility of bias entering into the picture, meaning that riders would tip more to certain people, and less to others. 

"When we started Uber six years ago, we thought long and hard about whether to build a tipping option into the app. In the end, we decided against including one because we felt it would be better for riders and drivers to know for sure what they would pay or earn on each trip — without the uncertainty of tipping," the company wrote. 

While Uber did not implement a tipping function, it did clarify its stance on tipping on its website. This is what it now says about the subject:

"The Uber app does not include a tip when billing you for a trip fare. 

In most cities, Uber is a cashless experience. Tipping is voluntary. As a rider, you are not obligated to offer your driver a gratuity in cash. 

If you decide you would like to tip, your driver is welcome to accept.

Where available as a vehicle option, uberTAXI is an exception. uberTAXI connects riders with licensed yellow cabs, and includes the option to set a gratuity percentage added to your trip fare."

(Image source: pinterest.com)


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