A new law went into effect in January in New York City, requiring app companies to include a suggested tip option set at 10% or higher on food deliveries. DoorDash and Uber sought a court order to stop the law from taking effect on Jan. 26 while their suit against the city proceeded, but a federal judge denied the request.
The food-delivery app companies expressed concerns the tip option could cause “sticker shock” for customers. DoorDash estimated a loss of millions of dollars in the coming year, fearing fewer New York customers would place orders. The companies also contended that the requirements violate their constitutional free-speech rights by restricting how they communicate with consumers about tipping.
US District Judge George B. Daniels said the companies’ suit was unlikely to succeed because the city’s new requirements weren’t overly burdensome and advanced “the city’s goals of enhancing cost transparency at the time of checkout, restoring customer choice, and providing protections to delivery workers.”
In 2023, the city passed a law hiking the minimum wage for delivery workers to at least $21.44 per hour. In response, DoorDash and Uber raised their service fees and moved the in-app tipping function to after checkout “so upfront delivery costs would seem lower,” according to Crain’s New York Business. That year, customers tipped 64% less and paid about 45% more in fees per delivery, noted a Bloomberg analysis of 2024 data, submitted by Uber and Doordash to NYC’s Department of Consumer and Worker Protection. Workers who previously made half of their hourly earnings through tips saw that portion fall to just 13% in the second quarter of 2025, though their overall pay increased due to the new minimum wage.
Source: Crain’s New York Business
