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12 min read

    12 min read

    Harry here.  This week, the media turned its attention on the tipping portion of the Uber lawsuit settlement.  I think this one issue has the potential to be the biggest concession of the entire lawsuit.  Drivers have wanted tips for a while and now it’s coming to the forefront of the media. Although passengers aren’t happy about it, they are realizing that it’s a hot button issue.

    Today, RSG contributor John Ince shares a couple stories about tipping your Uber driver and another not so pax-friendly Uber feature that drivers have been complaining about for a while!

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    John Ince shares why you should tip your Uber driver, and another not so friendly Uber pax feature that drivers have been complaining about for a while!

    Tip Your Uber Driver

    Sum and Substance: Tip your Uber driver. Don’t argue, just do it.

    Uber doesn’t include any kind of gratuity in the cost of your ride. And it doesn’t just pay drivers more to make up for that. The company implied that it did by saying there was no need to tip, and by simply not including the option to tip. The narrative is predicated on a deliberate omission. No one questioned it, partly because it tallied with the white-knight persona, the slaying of the evil cab companies and the victory of clever technology over a dinosaur of the 20th century. Tipping was an anachronism, only necessary because of how poorly cabbies were paid. So in the new Uber era: no tipping necessary. 

    Uber drivers make about $15-20 per hour on average, then have to pay for their own maintenance and gas after Uber takes its 20% cut. That’s not a bad wage, plus the flexible hours are nice, but it’s not great either, and it’s not like they’re going to get regular merit raises. But that’s all kind of beside the point. 

    Tips are an unfortunate relic of (among other things) the longstanding and ongoing underpayment of people in the service industry, but for now they’re also the reality. People working at jobs where their employers don’t provide adequate support — good wages, benefits, equity, expenses — often must rely on the unofficial and unreliable tip system to make ends meet. Uber drivers fall under that category, but the company’s narrative and the app itself are designed to exclude them from the tip process while giving the service the illusion of economy. It’s shameful, really.

    My Take: Tipping or the lack thereof has long been the chief gripe of Uber drivers against the company and their patrons.  It’s also a key differentiation with Lyft, which has long had a tipping option built into the app.  Uber has gone through various iterations on how they handle the tipping issue.  At first they said tips were included in the fare, which wasn’t true.

    Then there was litigation and Uber amended their line to there’s no need to tip.  It was clear from the outset that Uber doesn’t want their passengers to feel any obligation to tip, or sense of guilt at not tipping.  But with the proposed settlement in the big independent contractor / employee lawsuit last week, it appears that Uber will once again have to amend their stance on tipping.

    This time they say they won’t take action against drivers who solicit tips through signs or other means. Personally, I still find this whole thing very awkward.   When someone offers me a tip, I’m caught off guard, because it’s so unusual on the Uber platform.  I don’t know how to react, whereas on the Lyft platform, it just feels more comfortable, because you don’t have to enter into that awkward zone.

    What your take on all this?  Is tipping a big issue with you?  Do you think Uber’s “new” policy on tipping will change anything?

    Tipping Is Coming to Uber, and It’s Going to Be Awkward

    Sum and Substance: Uber Technologies Inc.’s mega settlement of as much as $100 million helps it solve a major legal liability around workforce classification, but another piece of the agreement could make for some uncomfortable situations in the near future. 

    As part of the settlement with drivers in California and Massachusetts, Uber has agreed to notify customers more clearly that tips are not included in fares and give tacit approval for optional gratuity. Drivers can now solicit cash tips by asking passengers or posting signs in their vehicles.

    Shannon Liss-Riordan, a lawyer representing the drivers, said riders should start seeing gratuities as a major part of an Uber driver’s income. In other words, more like a cabbie. “I believe that, with this information, many riders will begin tipping their drivers, which will increase drivers’ pay substantially,” she said in a statement to the court.

    The settlement doesn’t install any formal change in Uber’s tipping policy. The company said it has no plans to add an option to tip through its app or to lower the cost of fares under the assumption people will always leave tips voluntarily.

    Americans have never been able to agree on what services warrant tips and how much. (Just ask Mr. Pink.) Until Uber came along, for-hire drivers were one of the occupations that the average person expected to tip. Liss-Riordan expects riders to revert back to the cultural norms of pre-Uber black cars and taxis, after several years of being trained to do the opposite.

    This is a recipe for confusion. Uber, Lyft, and traditional taxis offer more or less the same service—in some cases, a single driver is working for multiple companies on the same day. This makes it almost impossible to form some sort of uniform social norms, said Lizzie Post, co-president of the Emily Post Institute, a publisher of etiquette advice. “Potentially, they’re changing behaviors and expectations; you have to be clear to the customer when they do that,” she said. “I don’t want to take an Uber and stress about whether I’m supposed to tip or not.”

    Post, a great-great-granddaughter of Emily Post and co-author of Emily Post’s Etiquette, said Uber should be responsible for clarifying the ambiguity around tipping. Drivers also have divergent opinions about whether people should be tipping them, but in a discussion on Reddit, many made clear that they do expect tips. One said he gives friendly passengers a four-star rating. To get five stars, they need to open their wallets.

    My Take: This is yet another of a flurry of articles this week about the tipping issue in the wake of the Uber settlement. Bloomberg, Business Week brings up a lot of good points, even going so far as to consult the high priestess of etiquette on this trending issue: Lizzie Post.

    Now some Ubers will only wait 2 minutes before charging you, not 5

    Sum and Substance: Better sprint outside, because now Uber can ditch you if you’re just two minutes late for your ride, or start charging you before you get in the car.

    Previously, people got a five-minute grace period to get to the car after it arrived, or to cancel their trip after they sent a request. But now, Uber is telling some users to “Request When You’re Ready” or face fees tacked onto their ride, according to a screenshot by Sree Sreenivasan. 

    Uber tells me it’s running a pilot program of the new no-show policy in NYC, New Jersey, Phoenix and Dallas, and will be evaluating results over the next few weeks before deciding whether to expand it to other markets. The pilot was just paused due to a bug but will be running again very soon.

    [Update: Uber says users will only be hit with a no-show fee if they don’t show up within 5 minutes of their driver arriving. But after 2 minutes of waiting, the rider will start to be charged the per minute rate for their city, which will be added to their ride cost if they do get in. Drivers also incur no formal penalty for ditching passengers at any time before they get in the car.]

    My Take:  Folks, let’s just calm down on this one.  The biggest effect of this policy change is that passengers have to cancel within two minutes of a request or they will get a $5 cancellation fee – a long overdue change. Then there’s the kick in sooner if they don’t show up right away.

    In most cities, the per minute charge for waiting is minimal. In Los Angeles, it’s 15 cents per minute.  So if passengers don’t show up for their Uber in 5 minutes instead of 2, their additional cost is a mere 45 cents.  But after 5 minutes, they could in theory get hit with a $5 cancellation fee. I usually give passengers another few minutes grace period.  One time I waited over a half an hour for a passenger – but mostly because it was so interesting watching a bunch of drunks party on the front porch. Then again I’m a reporter and my motivations in this gig are slightly skewed.

    Uber drivers lost the battle, but they may still win the war

    Sum and Substance: The ride-hail giant’s legal future remains murky. In the end, the price tag to maintain the status quo on Uber’s gig economy was $100 million. That may seem like a lot, but to Uber it’s a paltry amount, representing only 1 percent of its total $10 billion war chest. Don’t be surprised if you don’t see any Uber drivers celebrating in the streets.

    The settlement represents a huge win for Uber. If the lawsuit had gone to trial, and a jury decided that drivers indeed deserved to be full employees, then Uber could have suddenly found itself responsible for all sorts of extra costs.

    Instead, drivers will stay freelance, and Uber keeps its costs low. “Obviously the plaintiffs and drivers who wanted to be employees are going to be disappointed and they should be,” said Harry Campbell, an Uber driver who runs a website called The Rideshare Guy. “Even though the lawsuit was settled, for those drivers, Uber really won this case, and I wouldn’t be surprised to see them challenge the ruling.” 

    But drivers could end up eventually coming out on top, depending on how a couple of scenarios play out. First, the settlement needs to be approved by US District Court Judge Edward Chen, and everything he has said up until this point seems to suggest that he was looking forward to a jury trial. In December, he dramatically expanded the scope of the class action suit, effectively allowing the vast majority of California’s UberX drivers to join the plaintiffs. Later, he slapped Uber for issuing new driver contracts that could muddle the details of the lawsuit.

    But even if Chen approves the settlement, there are other ways that Uber drivers could ultimately prevail in their war against the company. A bill in the California State Assembly would allow drivers and other gig economy workers to organize and collectively bargain, much like a measure recently passed by Seattle’s city council.

    But more so than anything else, this settlement will likely set off a domino effect of other legal challenges that could end up seriously costing Uber in the long run. There are other actions pending in Florida, Arizona, and Pennsylvania, and labor lawyerDarren Oved says he wouldn’t be surprised to see more cases spring up in Uber’s other big markets as a result of this settlement. “Whenever you are a company and you have these multiple-front litigations, and you settle on the one front, that doesn’t really resolve the issues on the other fronts,” Oved said. “You run the risk of either creating a template of how you want to settle the other litigations, or in other jurisdictions where these litigations haven’t come up yet, you run the risk of motivating other people to commence a class action like in California and Massachusetts, [because] they want to do that in hopes of getting a similar settlement.”

    My Take:  At best, the settlement in this case buys Uber a little more time and gets the issue out of the news temporarily. Uber is, after all, waging a war on several fronts. The front line might have been the PR battle flowing from coverage of the much hyped June trial that was to be.  That battle is over now, temporarily, but more legal battles are looming.

    Most Uber drivers will see little of $100 milion payout

    Sum and Substance: Uber drivers made news last week when the company settled class-action suits for as much as $100 million, but court documents show that most eligible drivers will probably get less than $25.

    The exact figure drivers in the two states might be eligible is difficult to calculate precisely because many variables are involved. They include how many miles the driver drove with Uber and whether he or she opted out of Uber’s arbitration clause in its 2013 and 2014 driver agreements. 

    A small number of drivers will get on average $8,000. They will include California drivers who drove more than 25,000 miles with Uber and who opted out of the arbitration clause in the 2013 and 2014 Uber driver agreement, according to court documents.

    Drivers who drove fewer than 750 miles and who signed the arbitration clause could receive as little as $24. That figure is based on 100% of drivers filing to take part. If fewer do, the number could increase. The lawyers who brought the case intend to apply for fees and costs of no more than $25% of the settlement. That would be $21 million of the $84 million, but $25 million if Uber goes public and does well, court documents show.

    My Take:  On the driver message boards, Shannon Liss Riorden has been tarred and feathered with names like “Sellout Shannon.”  Yes, she could come away with as much as $25 million in this settlement, and that dwarfs anything the drivers will get, but remember, without the lawsuit, drivers would have gotten nothing.  The lesson here is clear for drivers: in your spare time take night law classes so that you too one day can be on the receiving end of the legal gravy train.

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    Readers, what do you think of this week’s news? What are your thoughts on tipping while driving for Uber?

    John Ince

    John Ince

    John Ince is a former Fortune reporter and Wall Street banker. He has about 1,000 rides under his belt driving part time for Uber and Lyft.  He’s writing a book about his experiences entitled:  Travels With Vanessa:  A Rideshare Driver Tries To Make Sense of It all - For a sneak peak visit the link above.