DoorDash and similar food delivery services are changing their tipping policy following the New York City government's decision to increase minimum wages for app workers.
DoorDash and UberEats will hold back their tip prompts until food is delivered, no longer offering tips as an optional incentive to entice faster delivery.
"As we have repeatedly made clear in recent months, the ill-conceived, extreme minimum pay rate for food delivery workers in New York City will have significant consequences for everyone who uses our platform."
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"Unfortunately, these regulations will significantly increase the costs of facilitating delivery in NYC and force us to make a number of operational changes, which is why we’re providing an update on what local consumers and Dashers will be seeing beginning today."
Uber Technologies, DoorDash and New York City-based Relay Delivery all filed separate lawsuits against the city earlier this year seeking a temporary restraining order to halt the pay rate requirement set to go into effect July 12. GrubHub also joined DoorDash's complaint.
App-based delivery service workers are typically gig workers who operate as independent contractors, so minimum wage laws generally do not apply to them. But New York City is the first to change that law, and officials claim that the move will lift thousands of residents out of poverty.
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Supporters of the law say that delivery workers in the city earn an average of $11 an hour after expenses, far below the city's $15 minimum wage. The city now requires a $17.96 minimum hourly wage for delivery workers — the rate will be raised to nearly $20 per hour in April 2025.
Delivery apps now say the increased financial burden will be pushed onto users with higher prices and fees.
"These new regulations will force us to raise fees for orders in New York City. In order to better balance the impact of these new costs, we’re moving the option to tip in the DoorDash app to after checkout," DoorDash said in its statement.
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"New York City released new rules that change how Uber Eats works locally," UberEats told its delivery workers in a similar statement. "Now you’ll earn at least $29.93 for every hour of time you spend making deliveries. Trip time starts when you accept a delivery request and ends when the delivery is completed or canceled."
The company added, "Signup bonuses and tips are not included in minimum earnings. Your tips will continue to be passed on to you in full."
Fox Business's Breck Dumas contributed to this report.
