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According to the Financial Times, Grubhub announced a new policy that has led to dramatically reduced tipping for drivers, and they’re naturally not happy about it.
This is largely due to the passage of Prop. 22. In Nov. 2020, California voters passed the ballot measure, which successfully overturned AB5 that aimed to force the gig economy companies to classify their workers as employees. Companies that rely on gig workers spent millions of dollars to ensure the ballot measure’s passage.
As advertised by the app companies, with Prop. 22’s passage came a slew of worker protections they claimed they’d offer instead of a complete benefits package, such as a track to receiving partial health insurance coverage for those who work enough hours in a week.
The food delivery company, for its part, rolled out a new ordering system for customers, which among other things, shifts the default tip from around 20% to zero. Though customers can still tip their drivers, it’s no longer the default, adding an extra step for customers and leaving it wholly up to them to decide whether to tip and how much to tip. Cited on the Financial Times, Reddit users expressed their discontent. Some of the reactions included: “The benefits are not nearly high enough to compensate for encouraging no tipping;” “Such [expletive] to drive this wedge between customers and drivers;” “This is chilling. Really disappointing.”
As previously reported, companies like Uber, DoorDash, Lyft, and Instacart have announced they will raise their prices for customers in California to pay for the benefits they promised their workers. Grubhub and Uber specifically began charging customers recently an additional “Driver Benefits Fee” that can be as high as $2 and is meant to cover healthcare stipends, a minimum earning rate, and a credit of $0.30 per mile for vehicle expenses.
As Input Magazine wrote, “Grubhub’s change to default tips looks like an attempt to soften the blow of new fees in terms of the total customers see at checkout.” Drivers for Grubhub who spoke to the Financial Times said that the hit to tips from the change has been significant and immediate. One driver in San Francisco said how on two consecutive Saturdays she completed the same number of orders, eight, but five fewer people tipped following the alteration to the app. Before the change she made $61.03 in tips, but afterward, she netted just $24.71.
“DoorDash, UberEats, Grubhub, and other delivery apps can’t raise prices for customers to pay workers a living wage because then the services likely won’t be seen as affordable enough by enough consumers to generate growth,” Input Magazine wrote. Instead, it’s gig workers and restaurants who are taking the hit.