Tipping drivers: New York's latest battle with Uber

Less than two years after backing off on efforts to restrict the number of new licenses issued to for-hire vehicles, New York City is again taking aim at Uber. This time, it’s over the ride-hailing company’s app, which doesn’t include a tipping option.

New York’s Taxi and Limousine Commission (TLC) unveiled a proposal Monday requiring car services that take only credit cards for payment to let customers add a gratuity. Drivers for companies that take only cash could continue to accept cash tips. Uber, which allows only credit card payments, creates confusion for customers unclear over how drivers are paid and whether a gratuity is expected, critics contend.

Rules on tipping are a first step in a larger process to bring some of the income protections given to yellow taxi drivers to those in the for-hire world, the commission said in a statement.

“At an almost six-hour hearing on April 6, the TLC heard testimony about a decline in earnings due to fares being paid by passengers going down, increases in commission and high vehicle costs as well as confusion due to discrepancies between the passenger fare and the fare that the driver’s pay comes out of,” the commission said.

Hailing the move is the Independent Drivers Guild (IDG), an organization representing Uber drivers in the city, which has for months been advocating for a noncash tipping option for Uber customers. The lack of one on Uber’s app diverts an estimated $300 million a year in tips from New York City Uber drivers, Jim Conigliaro Jr., IDG’s founder, told a conference call Monday afternoon.

“People do want to tip. They actually feel uncomfortable when they get out of the car and can’t tip the driver,” said Conigliaro, who added that he finds it a nuisance when he uses Uber to have to make sure he has cash to tip the driver.

The group began its campaign after Uber “refused to budge” on the issue, which is one of the major points of contention for its drivers, said Conigliaro.

Luiny Tavares, an Uber driver for five years, said he left his job as a dispatcher because the company led him to believe that passengers and fares would cover his costs and allow him to increase his income. “I found myself having to work longer hours to make the same money,” he said. “Drivers often feel voiceless when they drive for an app. My hope is that drivers in other cities across the country will come together” to demand better treatment from Uber.

Rival Lyft, which lets customers tip from its app, in March said its drivers earned more than $200 million in tips nationwide since it started the practice in 2012. Tavares, who drives for both Uber and Lyft, said he’s able to cover the cut of his fares taken by Lyft with the tips he receives from its passengers.

An Uber spokesperson said the company had not yet seen the TLC’s proposal but looked forward to reviewing it. “Uber is always striving to offer the best earning opportunity for drivers, and we are constantly working to improve the driver experience,” the spokesperson said in an email. 

The proposed rule is expected to be formally introduced in July and would be followed by a public hearing to determine the exact language and how it would apply.