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Uber had the chance to do the right thing with tipping, but it failed

Uber had the chance to do the right thing with tipping, but it failed


And now it may be too late

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Photo by Amelia Holowaty Krales / The Verge

Since time immemorial, Uber has stood alone against the scourge of tipping. Or, another way of looking at it: since its inception, Uber has refused to do right by its drivers and allow for tipping within its app. Either way, that may be coming to an end.

Today, the New York City Taxi and Limousine Commission said it was considering enacting a new rule that would require car service companies like Uber to offer a way to tip that was commensurate with the method of payment. And since Uber is a cashless experience, that would mean Uber would be forced to add an in-app tipping option.

As New York City goes, so goes the rest of the nation?

As New York City goes, so goes the nation? It would be very easy to see other major cities following Gotham’s lead and requiring cashless tipping as well. And after a while, Uber could decide that it makes more sense to standardize in-app tipping, rather than continue to juggle different versions of its app in different cities. As my colleague Sean O’Kane correctly notes, Uber decided to cap surge pricing during emergencies nationwide in 2014 after New York first forced the ride-hail to adopt the policy. The same could go with tipping.

Of course, Uber had the opportunity to do the right thing by its drivers and add a tipping option in its app a year ago this month. It’s a long story, but the gist of it is, Uber was briefly required to inform riders that tips were not included in their fare as part of a huge, $100 million settlement with a class of drivers who were suing for being wrongly classified as independent contractors. Uber agreed to the terms, but a judge later rejected the settlement as being not generous enough to drivers. The negotiations are still ongoing.

Uber had the opportunity then to reverse its position on tipping and earn itself some goodwill — keep in mind, this was months before the latest onslaught of bad headlines for the company — but instead it stuck to its guns. "Nothing has changed," Josh Mohrer, Uber's New York City general manager, wrote in an email to users last year. "As we've said for many years, being Uber means you don't need to tip. Of course, if you want to tip your driver—we estimate riders offer tips on only a very small number of trips—you’re free to do so, and drivers are free to accept."

Instead, we got BS features like “driver compliments,” in which riders could send quirky compliments (“great conversation!”) to drivers beyond leaving them a starred rating. Meanwhile, Uber sought to undermine the very notion of tipping. The company cited a 2008 Cornell University study found that "consumers of both races discriminate against black service providers by tipping them less than white service providers." But the study predated the gig economy by several years. And now Uber has trained consumers to leave their cash at home, and that stars, not dollars, translate into better service.

Meanwhile, Lyft allows riders to tip, as do other taxi and car service apps, and we haven’t seen any evidence that it’s led to rampant racism. Lyft started offering in-app tipping in 2012, and the company says its drivers have pulled in $200 million in tips since.

“The exploitation of ride-hail drivers must end and this is an important first step.”

Now, Uber is weakened, and the company’s foes smell blood in the water. The Independent Drivers Guild, a group with union connections that advocates for gig economy drivers, hailed the proposal by the city’s TLC as a step in the right direction. “Drivers have long been denied access to the kinds of benefits and labor protections many workers take for granted, such as paid sick leave or the minimum wage. As a result, New York City’s professional drivers have traditionally depended on gratuities for a substantial portion of their income. Cuts to driver pay across the ride-hail industry has made tipping income more important than ever,” the group’s founder Jim Conigliaro, Jr. said in a statement. “The exploitation of ride-hail drivers must end and this is an important first step.”

Conigliaro is right that professional drivers in big cities have struggled to keep up their earnings as Uber and Lyft slash fares in their intense competition for dominance on your smartphone. Tipping won’t solve this, but it will help improve a key element that Uber has been taking for granted: loyalty, from both riders and drivers.

Anti-tipping riders could continue to avoid offering a gratuity, but eventually they could come around, especially if they found that stinginess was adversely affecting their ratings. Uber’s rating system is already weighted heavily against drivers, so much so that the company finally recognized this and has begun to implement ways for drivers to contest bad ratings and deactivations.

I’ve long argued that adding a tipping option is quite literally the least that Uber could do to shore up its image problems, of which it has many. It’s probably too late for that now, especially if New York City is successful in forcing the company’s hand. A year ago, Uber could have embraced tipping on its own terms, as a way to show it was hearing driver complaints and was committed to doing something about it. Instead, it pulled out its pockets and claimed ethical poverty. It doesn’t look like Uber will be afforded a second chance.