Do we really have to tip now? What Uber's $100M driver settlement means for riders

To tip, or not to tip?

That is the question for Uber riders this week following the $100-million US settlement of a class-action lawsuit brought against the company by its drivers — and many are wary of what the answer may be.

The popular (and polarizing) ride-hailing service reached an agreement with groups in two states on Thursday to maintain the status of its drivers as independent contractors, not employees.

In lieu of being forced to pay for things like employee benefits, health insurance and expenses for its drivers, Uber will pay out a lump sum of approximately $100 million if a judge approves the deal — $84 million of which is guaranteed to drivers, $16 million of which is contingent on an increase in the company's value.

But money alone wasn't enough for the plaintiffs, Uber drivers from California and Massachusetts, to drop the lawsuit.

Uber also had to make some concessions based on concerns raised by drivers involved in the case.

"As Uber has grown — over 450,000 drivers use the app each month here in the U.S. — we haven't always done a good job working with drivers," wrote CEO Travis Kalanick in a company blog post about the settlement on Thursday. "At our size that's not good enough. It's time to change."

The post explains that Uber will be working to create drivers associations, affordable quality improvement courses and to "provide drivers with more information about their individual rating and how it compares with their peers" as part of the settlement, among other things.

Uber also rolled out a new deactivation policy for all drivers in the U.S. and is creating an appeal process to "improve transparency and accountability and give drivers an additional voice," according to Kalanick.

Tipping comes to Uber

With all of the big numbers and improvements for drivers wrapped into the settlement announcement, it was easy to look past what any of this might mean for Uber riders last week. 

That changed on Sunday when, after combing through the agreement's details, the Wall Street Journal highlighted an interesting change to Uber's rules: Drivers are now permitted to solicit tips.

Specifically, drivers can now post signs in their cars telling passengers that tips are not included in the fees they pay for rides through the app.

Attorney Shannon Liss-Riordan, who represented the driver plaintiffs in the case against Uber, called this one of the most significant non-monetary terms of the agreement in an interview with the independent worker support platform SherpaShare published Wednesday.

"What really got me mad about Uber when I first started hearing about Uber back in 2012 or 2013 was what they were doing with tips," she says in a video on SherpaShare's blog. "Uber's mantra was 'leave your cash at home, the tip is included, no need to tip on Uber' — but as we all know, that wasn't true … Uber misled its passengers into believing it's OK not to tip because 'don't worry, the tip is included.'"

Liss-Riordan explained that Uber would be doing two things to remedy this as part of the settlement: Make it clear to passengers that tips aren't included, and allow drivers to put small signs in their cars saying the same thing.

"My hope is that when drivers start putting these signs in their cars and passengers become educated about the fact that there's not a tip included … most people will tip," she said. "If everyone puts these signs in their cars, that will be the new norm."

The problem, however, is that Uber has yet to add a tipping function to its app. This means that passengers would have to carry cash in order to tip on top of what they've already paid through their smartphones — and riders aren't used to that.

Liss-Riordan hopes that customers will pressure Uber to add a tipping function to its app, like rival service Lyft has.

"Passengers will get annoyed that they have to carry cash," she said. "Isn't the whole point about Uber a cashless experience?"

They very well might pressure the company to make tipping easier, but not necessarily out of the goodness of their hearts.

As many around the web have noted, tipping Uber drivers could become downright necessary if the practice takes off. Those who don't tip could suffer some serious damage to their own rider rating and find themselves unable to hail Uber drivers at all.

"Since Uber riders are rated by drivers, the drivers have a bit of leverage besides guilt," notes Time. "Leaving a bad tip or no tip at all could lead to a bad customer review — and down the road drivers could be inclined to pass on picking up riders who are known as bad tippers."

It is not yet clear whether these changes will roll out globally or only across the U.S. CBC News has reached out to Uber Canada for clarification and will update the story as information becomes available.

As it stands, Uber has not updated its website to make clear that tipping isn't included in the price of a ride.

"You don't need cash when you ride with Uber," reads the rider help section, which is the same for both Canada and the U.S. 

"Once you arrive at your destination, your fare is automatically charged to your credit card on file — there's no need to tip."

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About Văn Khang Nguyễn

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