$550M in Tips Vanish as DoorDash and Uber Eats Squeeze 65,000 NYC Couriers

On December 4, 2023, delivery workers in New York City saw their tip earnings drop sharply as DoorDash and Uber Eats shifted tipping prompts to post-checkout screens, coinciding with the start of a new $21.44 minimum wage. Over 18 months, average tips fell from $3.66 to $0.76 per delivery—a 79% decline that cost the city’s 65,000 workers $550 million, according to a January 2026 report from the Department of Consumer and Worker Protection.

A Coordinated Interface Shift

Both platforms made the change on the same day the wage law activated. Regulators called the new post-purchase screens easy to miss and hard to use. The redesign came as companies adjusted to higher base pay requirements, leading to a sharp reduction in customer tipping.

The report detailed how workers gained from mandated wages but lost most voluntary tips, which had formed the bulk of their income. Individual earners faced an annual hit of about $5,800. DCWP Commissioner Samuel Levine described it as a significant scheme by the companies to cut worker pay.

Grubhub’s Stable Approach

Grubhub kept tipping prompts before checkout and held steady at $2.17 per delivery—nearly three times the rate of its rivals. This gap, amid the same market conditions, pointed directly to app design as the driver of lower tips, not shifts in customer habits or the economy.

Legal Challenge Ignites

DoorDash and Uber Eats sued New York City in December 2025 over rules mandating pre-checkout tipping prompts with at least 10% suggestions. The companies claim the requirements force government-mandated messages, violating First Amendment free speech protections. A federal hearing on their injunction request is set before Judge George Daniels, with the law due January 26, 2026.

Platforms defend post-checkout tipping as standard in hospitality, arguing it better matches service quality and avoids overwhelming customers with upfront costs alongside fees. They warn pre-checkout prompts plus higher fees could reduce orders.

Wage Law’s Mixed Results

New York City led U.S. cities with minimum pay for app-based delivery workers, reached through Los Deliveristas Unidos advocacy by mostly immigrant laborers. The $21.44 hourly rate, for active delivery time, followed years of low $5-7 earnings amid equipment costs and risks.

Early data showed gains: Q1 2024 hourly pay with tips hit $19.26, up 64% from $11.72 the prior year. Platform payments to workers rose $1.2 billion. Companies stayed profitable—DoorDash posted $123 million net income in 2024, Uber $3.1 billion in H1 2025—with orders up 8% and spending at record $120.2 million weekly.

Fees climbed: service charges averaged $2.30 more per order, delivery fees up 60% to $7.79. Total customer costs per order edged from $38.35 to $39.11, as lower tips offset hikes. Tips made up 53.4% of 2024 worker earnings, exposing vulnerability to design tweaks.

Under Mayor Zohran Mamdani, sworn in January 2026, enforcement ramped up with warnings to over 60 apps. His campaign opponent received $1 million from DoorDash, fueling tensions.

Broader Pressures and Trends

Restaurants bore rising costs: $5.63 average per delivery in Q2 2024, 19.7% of subtotals, plus 30-35% commissions straining 3-9% margins. Globally, cities like Seattle set gig minimums, the EU eyes contractor reclassification by 2026, and Malaysia added protections in 2025.

The lawsuit could limit city power over app interfaces, echoing a 2024 ruling against data-sharing mandates. A ruling may redefine balances between worker rights, platform speech, and consumer costs, influencing regulations far beyond New York.