Economy

Amid court battles for Uber drivers, a bill to make tipping easier could bring worthwhile change

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A California bill could provide an easy boost to drivers' wages as the rideshare company addresses larger legal concerns. It's a move that could benefit workers across the gig economy. 

A rideshare driver displays Lyft and Uber stickers on his front windshield as hedrops off a customer in downtown Los Angeles. A bill recently introduced in California's General Assembly would require Uber and other credit-card-accepting businesses to accept tips.
Richard Vogel/AP/ File
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Two years ago, “Katherine” began driving with rideshare company Uber to boost her income. In her Camry’s center console, she also keeps the pink-and-silver decal of Uber’s chief rival, Lyft.

In addition to more customers, Katherine, who asked that her real name be withheld, says driving for Lyft offers a chance at more per-ride income in the form of tips. “When I was exclusively driving for Uber ... I met people who drove for Lyft, and they were like, ‘Oh, no, I do it for the tips.’ ” Riders with both companies pay electronically via a smartphone app, but only Lyft gives the option of tipping at the end of a ride.

Uber riders can still tip their drivers in cash, but the company hasn’t exactly encouraged the practice. Uber wants to spare both drivers and riders the “uncertainty” that tipping would add to a ride’s cost, and maintain a “hassle free” experience for customers, according to The New York Times.

But a growing number of Uber drivers are trying to add tips to their income. In February, Atlanta-based driver Jon Knope wrote for The Rideshare Guy that many drivers have “started using tip signs, boxes and jars and seen their tips go up as a result." And Washington, D.C., driver Peter Faris has started a petition calling on Uber to add a tipping feature, receiving more than 30,600 signatures so far.

Now, a bill recently introduced in California’s State Assembly aims to mandate this feature, requiring businesses that accept credit card payment to accept tips the same way. The bill's author, Assemblywoman Lorena Gonzalez Fletcher, says it could yield progress for workers across a variety of workplaces – hair salons, for instance – where most customers now pay in plastic. But she's especially interested in protecting the increasing number of Californians finding full-time work as Uber drivers and elsewhere in the "gig economy." 

"Originally, some of these gig workers were literally doing [it] on the side," she tells The Christian Science Monitor in a phone interview, adding that she's met a lot of Southern California teachers who drive for Uber on the side. But "when you start to have more and more Millennials coming up" into the workforce, "this is their job."

She sees a need for labor laws that cover those who drive for Uber and work other "gigs" full-time. But until broader reforms can be achieved, removing barriers to tipping could bring gig workers a quick – and politically easy – income boost.

“Under California law, it is very clear that any tip belongs to the person for whom it's left,” explains Dan Eaton, attorney and lecturer at San Diego State University's Fowler College of Business. “Uber as a company couldn't take any part of that. But I don't expect that would be a reason for the company to resist it, since it already allows tipping.”

In the gig economy, every tip counts

But the lack of an electronic tipping feature makes it inconvenient for many passengers to leave a gratuity, said Mr. Faris, who started the tip petition, noting “many people use Uber because they no longer carry cash, so it makes sense to have tipping as an in-app option.”

For the 38 percent of Uber drivers who are full-time, a few extra dollars at the end of each ride could add up, as most experienced traditional cab drivers can attest. Longtime Boston cabbie John Scott tells The Christian Science Monitor that he drives about 16 hours a day, taking home a net income of $1,000 per week. Fifteen to 20 percent of that, he estimates, comes from tips.

Not everyone stands to gain as much. In 2015, about 30 percent of Uber drivers were only on the road part-time. One of them is Katherine, who estimates that she drives about four hours a day, and says she doesn’t “necessarily see a difference with the tips” when driving for Lyft.

But as the California assemblywoman noted, gigs are increasingly taking up a full day's work. One recent study found that the number of full-time Millennial independent workers grew from 1.9 million in 2011 to 5.3 million in 2015. By 2020, it projects that 22.1 million Americans will be doing independent work full-time.

“We have to keep bringing [this trend] up as an issue and slowly chip away at the edges of what's unfair on behalf of the workers,” insists Ms. Gonzalez Fletcher, a former AFL-CIO leader who now represents San Diego’s District 80, “and the most obvious to me was the tip issue.”

Echoing the concerns raised by Faris’s tipping petition, she says that “we're going to this cashless society, and we have some apps that are able and willing to allow those workers to earn tips through the app process,” but some, like Uber, that don’t.

If people tip for ice cream, will they tip Uber drivers?

Would Uber riders tip more if this barrier were removed? Possibly. In 2014, Cornell University economist Kevin Hallock wrote about an ice-cream parlor that “adopted an iPad-style cash register that offers four tip suggestions.” One of those options, “no tip,” “essentially forces the customer to affirm publicly what some might consider being, well, stingy.” With the new register, tips increased up to 50 percent.

And in the ridesharing sector, Lyft says that its drivers have earned a total of $200 million in tips.

But even if cash-free tipping lifts Uber drivers’ earnings, many of them are likely to face other challenges. Uber currently classifies its drivers as “independent contractors,” rather than “employees.” It claims that this policy provides greater flexibility, but many drivers say it leaves them vulnerable to arbitrary deactivation, abrupt fare changes, and other unfair treatment. Gonzalez Fletcher says it also leaves them unprotected by California's minimum wage, unemployment insurance, and other labor laws.

Resolving these problems has been no easy task. On Tuesday, a federal judge sided with Uber in its lawsuit against Seattle, blocking that city’s first-in-the-nation law that allows Uber, Lyft, and taxi drivers to unionize.

In California, meanwhile, labor leader Rome Aloise says that the International Brotherhood of Teamsters, where he serves as international vice president, is seeking “a rational and realistic method to bargain for fair payment and conditions for the drivers.” Gonzalez Fletcher also sought this goal during the last legislative session, introducing a bill that would have created a new class of worker – neither employee nor independent contractor – with negotiating rights.

However, she pulled it. “We had to be able to explain fully the legal arguments behind what we were trying to do,” she explains. 

Mr. Eaton, who helps advise and defend employers, but no rideshare companies, at the San Diego firm Seltzer Caplan McMahon Vitek, describes her new bill as more modest, saying that just adding tips is “hardly transformational” for the company-driver relationship. That could actually bode well for the proposal, which faces its first public hearing on April 19. Uber did not reply to requests for comment on the measure, but Eaton suggests that the rideshare firm could have less reason to oppose it than, say, collective-bargaining rights.

“It may be,” he ventures, “because this is [tipping bill] is not a transformational change, that it may find success in a way that these other changes that Assemblywoman Gonzalez Fletcher has pushed [for] have not.”

But looking ahead, Gonzalez Fletcher says she’s still committed to resolving the bigger – and more challenging – questions many Uber drivers face, finding a way to combine contractors' flexibility with full-time workers' protections and benefits.

“This is just one thing that would be helpful,” she says of the tipping bill, “but in the long term, we still have to get at the entire gig economy.”

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