Published September 8, 2015|4 min read
Updated: Feb. 1, 2017: Uber, the ride-share service, is more popular than ever. In 2017, 40 million people used Uber to take a trip, and that’s despite some very public and embarrassing missteps that seemed to threaten the company’s existence.
The Uber app summons a driver directly to your doorstep and lets users know the ride fare upfront, making the whole process of getting from Point A to Point B seamless and convenient for anyone with a smartphone. But, until recently, Uber has been less forthcoming about whether you should tip your driver, one part of the experience that many users overlook.
It wasn’t until last year that Uber allowed in-app tipping, a service featured in the apps of virtually all Uber’s competitors.
The change followed news that drivers for Lyft, the second most popular ride-sharing service, had earned $200 million in tips in 2017, as well as a threat from the New York City Taxi and Limousine Commission, which regulates one of Uber’s biggest markets, to require tipping. By that summer, Uber was already rolling out in-app tipping options in some cities, and by July 2017 the function was available countrywide.
When your driver drops you off at your destination, in addition to the star review, you’ll have the option to tip $1, $3, $5 or a custom dollar amount. You have 30 days to add a tip. Uber doesn’t take a cut. The company did not respond to requests for comment, but does say on its website that tips “are neither expected nor required.” You can also tip in cash.
Lyft has allowed in-app tipping since it launched in 2012, making it the first ride-share company to do so. Its app has options to tip $1, $2, $5 or a custom amount. Last year, the company rolled out a new prompt for rides over $25 that displays a $2, $5, $10 or custom amount tipping option. Lyft told me that drivers have earned about $350 million in tips since its inception.
“Passengers embrace a range of tipping styles,” Kate Margolis, Lyft’s corporate communications lead, told me. “From people who tip $1 on every ride, to those who tip a generous $20 as thanks to a driver who helped with luggage or who engaged in a great conversation.”
It’s highly recommended. As John Ince explains on The Rideshare Guy, an online resource for ride-share drivers and riders, “People working at jobs where their employers don’t provide adequate support — good wages, benefits, equity, expenses — often must rely on the unofficial and unreliable tip system to make ends meet. Uber drivers fall under that category.”
Ride-share companies take a cut from its drivers’ earnings. For Uber drivers, the cut could be as high as 25%, and Lyft has a similar commission structure. Both don’t take into the account the cost of car loans, auto insurance and everyday expenses like gas, maintenance and even health insurance that Uber doesn’t cover. Drivers also purchase ride-share insurance to cover accidents that occur while waiting for a fare to come in. Uber and Lyft drivers are covered by the company while en route to a passenger and before they drop the passenger off.)
Ride-share drivers are not classified as employees, a designation under which they’d be entitled to certain workplace protections. Instead, they are usually independent contractors. Imagine having to lease your work computer from your employer and you can see why drivers deserve a little extra.
Additionally, many drivers include free amenities in their car in an effort to score a good rating. Those water bottles and bite-size candy bars are free to you, but they come out of the driver’s paycheck. These costs add up, and your tip could help to make up the difference.
Your driver is performing a service, and there’s no reason not to tip your ride-share driver as you would traditional cab drivers, waiters, hairstylists, food delivery workers or the fellow handing you a damp towel in the washroom of a posh club. The same rule of thumb also applies to other service industries: 15%-20% of the pretax subtotal, and lower if the car reeks or the driver was rude.
Uber has come under fire for overstating driver wages in its recruiting ads, which may have had the effect of convincing riders that Uber drivers are already paid sumptuously enough. In fact, in its earliest days, Uber claimed that their payouts were so high that tipping was unnecessary, essentially misleading users into thinking that tips were included in the fare. But a quick browse of any of the online ride-sharing communities reveals that this isn’t true, and many drivers report earning a less than ideal wage.
Don’t be misled by the well-designed app or the shiny black car at your doorstep. Your tip could mean the difference between a driver’s ability to put food on the table or not, or at least allow him or her to work fewer hours that week.
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