Uber drivers file class-action suit over tips | Hacker News Reader

Uber drivers file class-action suit over tips

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43 pointsubasu61 comments

I hope Uber can succeed in taking a stand on this. Tips are terrible for both consumers and workers; the only beneficiaries are the employers, who get away with underpaying their employees. And most of the world agrees. Why is North America so slow to realise this?

Agreed. I travelled overseas this summer, and what I miss most was the tip-free culture. It was so refreshing to know exactly what something would cost you. When I go into a cab or a restaurant in America, the bill at the end always seems to be a mystery. It's a very anti-consumer condition.

I just spent two months living near Chicago, and I have to agree. The fact that taxes (city + state + county) and tips aren't included in prices means that the amount you really spend isn't at all obvious until it comes time to pay. It was quite maddening.

Tipping is virtually unheard of in Israel (except a standard 10% in restaurants), and all prices are required to include tax. So if the taxi meter says that you need to pay 15 shekels, you can be sure that this is the price.

Tips give the server a motivation to get customers served and out the door faster: The chance to work more customers and thus acquire more tips.

This is obviously good for the employer but may also be good for the consumer, if they are in a hurry.

This is an empirical claim: namely that tipping results in better service.

The evidence I have seen does not favor this hypothesis: http://freakonomics.com/2013/06/03/should-tipping-be-banned-...

I don't see anything in that link or the transcript that actually addresses this point.

(Note that I limited my claim to "faster service", not overall "better service" or "perception of better service".)

This seems like a good time to point out that every study of tipping I've come across fails to find this sort of incentive effect.

Unless you want to call it "bribery", under which circumstances it can have some potent effects.

The difference is that bribery usually involves an upfront payment. Maybe people should start tipping before their meal.

The only difference I've noticed between service in North America and that in Australia is that I get iced water and the bill at the end really fast in North America. Everything else is more or less the same.

> Why is North America so slow to realise this?

It's part of the culture. And culture has always been an extremely inert thing. Decades are often needed to correct major problems that are anchored in it.

Probably the most effective way to get rid of the tipping culture would be for a majority of business owners to visibly declare:

"No tipping allowed. We pay fair salaries."

Does a business owner have a clear economic incentive to do this? No. At most an ethic one. And maybe there's a tiny bit of PR value in it.

Being spanish I don't find necessary to forbid the tips. Here if you are halpy with the service you let a couple euros, if it's a large bill something more, but it's not mandatory and the waiters are not going to look bad at you for not doing it. Every time I go to the states I find anoying that the waiter or the taci driver are counting every cent I let them, and that there is the possibelity to have a dispute over that. I'll rather have the quantity declared on the total of the bill and avoid that tense situation. I don't get how you can separate the food from the service, it seems like if the restaurant service were provided by random guys that just happen to be there that day, and not by proper employees. I know it's not like that but I can't avoid getting that sensation when I have to pay.

At least one restaurateur who tried a no-tip policy found tips actively harmful:

http://jayporter.com/dispatches/observations-from-a-tipless-...

Very interesting piece, thank you. I didn´t know how much the american laws are set about tipping. It´s not like that in Spain as far as I know. I don´t know about the dynamics but I´ll expect that they are playing a similar role between employees.

> It's part of the culture.

It's the same culture that feels individual charity is the best way to deal with poverty.

(And also there's this wonderful subset of this culture that feels that it's clever and thoughtful and generous to leave a Bible verse instead of a tip.)

Really?!? Is this a widespread phenomenon? That seems bizarre and unfair to me.

America is the land of freedom, not fairness. :P

...I snark, but it's true. =/

> the only beneficiaries are the employers

Customers who don't tip also benefit.

Um ... but Uber isn't "taking a stand on this". If the lawsuit is correct, Uber is just conning the customers into thinking the drivers get tips then stealing them. Just because you think tips are a bad payment mechanism, it doesn't follow that what Uber is doing is right.

(never used Uber so no judgment on if the lawsuit is correct or not)

The two times I used Uber, there was a single flat fee paid with no mention of a tip. The driver and I never discussed payment; it was all handled via the interwebs. Given that one of the perks of Uber is the "no fumbling with the credit card at the end of the ride", it would be rather divergent from the whole experience to be tipping separately.

I wouldn't have much of an issue tipping if it were via the same payment mechanism, though. Feels weird not to after years of taking cabs.

You misread the article.

It's Uber's black car drivers that are annoyed because they don't get tips, while Uber's Taxi drivers get a built-in 20% tip. The black cars are Uber's flagship product, run the way they want it run (fair pay without tips). The Taxi system includes a tip because no taxi driver would accept a fare that didn't include a tip. But—the taxi drivers still earn less than the black car drivers.

That article is somewhat confusing. The issue isn't that Uber doesn't allow tips, it's that when a person does decide to tip , Uber takes 50% of it.

Here is a much better writeup: http://www.theverge.com/2013/8/28/4668504/uber-lawsuit-san-f...

I've used the app several times and I've never been prompted to enter a tip. Maybe it's a new feature?

Edit: After reading a few more sources I think the issue is that every fare has a built in 20% tip, but Uber takes half of it. Another source: http://www.businessinsider.com/uber-drivers-open-lawsuit-ove...

I took an Uber black car to the airport a couple days ago and there was not any UI for tipping. I looked to see if I could add in a tip; it's a flat fee for the ride. How can they take 50% of something that doesn't exist?

>20% of the metered fare will be automatically added and paid to the driver as a gratuity.

http://support.uber.com/entries/22338858-Tipping-Drivers

That's talking about calling taxis (i.e. yellow cabs). kevingadd said he took a black car, not a taxi.

"20% built-in tip but Uber takes half of it" sounds very much like "10% built-in tip", and even more like "Uber pays ~9% of the sum for each ride directly to the driver".

This whole thing sounds crazy and confusing.

BTW, I do tip cab drivers, in direct proportion to their performance: taking fast routes, driving smoothly, etc. Usually I just pay the tip in cash.

Is that really the case? Would Denny's really be paying servers $20 an hour if not for tips?

Yes, because otherwise no-one would work there.

I don't understand why this is an issue for the courts rather than one for the market. If you can make more money not driving for Uber, don't drive for Uber?

These workers could have ties with taxi companies (and they're being paid to bring on the lawsuit), or they want to take advantage to get more money.

Informed consumers is one of the assumptions of a free market, and the lawsuit alleges that Uber is lying to consumers.

I am amazed by the well, anti-union, line being taken here.

Über is just trying to break into a regulated industry - and that means breaking regulations.

Regulations are usually what is imposed after the fight is over - and taxis have gone thru a long period of controversy, legal disputes and often criminal behaviour to get where the regulations are now.

Über will cause some change (285m will guarantee that) but in the end there will be new regulations cementing the status quo. And since everyone realises there will be a new status quo, everyone who has a brain will pile in now and make sure their slice of the pie is as big as possible at the end.

Über does not deserve to win just because it started the fight.

I agree with you. Uber doesn't deserve to win just because they started the fight.

But Uber toghter with Google, have the potential to dramatically change how transportation is being done.

They could start a shared taxi/van service on demand which at that scale could compete with cars on price and performance(at least according to some researchers and the finish kutsuplus public transportation service).

But in order to try that, at least some regulations should be revoked, at least temporarily.

Of course, that doesn't mean user should cheat drivers out of wages.

People love Uber because it's disruptive and it's better than taxis. But, the future is not Uber. The future is any car owner becoming a taxi. I have a ride; you need a ride. Why shouldn't this be? There can be services that track reputations of both drivers and passengers and travel arrangements can be taken care of through a central service as well. Taxi monopolies are archaic and need to die. Uber is a transitional service but it is certainly not the final answer to the current way of things.

That can be both good and bad. Good because you get a ride very quickly. It's bad because you have no idea...

  * Who your driver is
  * How long h/she's been driving
  * If there's a camera in the taxi (for your own protection)
  * Whether that's being monitored or just disconnected
  * How well the car is being maintained
  * Whether the driver has insurance and actually knows how to get to your destination
  * Whether h/she's from New Jersey (I kid, I kid... mostly).

Taxis are regulated, ideally, for this reason. I think drivers should have the right to apply to become a taxi driver, but then they have to maintain certain standards -- especially safety, competence and fee structure -- or what we end up would be an order of magnitude worse than what we have.

The future is actually externally-verified personally signed data systems, which could cover most of these fairly easily.

This already exists. It's called a taxi company.

It's funny, this is the way it used to work in Ukraine back in the day. You would step out, wave down a car, basically any car. They would stop for a second. You say where you are going, if its on the way, they would tell you a price. You get in and you are on your way. Maybe it's different time and society, but that system used to work well.

This is hilarious. Good hilarious. I live in small time small city China. Usually I'd take a taxi to work, and sometimes there are no taxis. So I'd hail down a chap and persuade him to drive to my workplace. This is not disruptive, the future is the past, it is normal life.

I have a lot of friends who work in the service industry. All of them complain about their tips being skimmed off credit card transactions by the owner. Every single one.

Tips = Commission. Stop conflating it with a bonus for kissing your ass. It's an incentive to hustle and get orders filled.

Don't understand this attitude at all.

Tips are nothing but a demeaning way to tell low-status workers that the value of their time is arbitrary and their livelihood is always subject to whim. Do you tip your doctor? Do you tip anyone with a high-status job? Of course not.

Tipping should just be abolished. Set a price and charge it. Pay people fairly and consistently so they can feel secure and plan for the future. Anything else is just sneaky.

I guess you don't get out much, or haven't run a service business. The concept is variable cost of labor. If you're a bartender working a busy shift, you can pocket several hundred dollars off dollar a tip drinks.

What do you think would happen if tips were abolished? The owner would increase their wage a tiny bit. Who do you think will be working that job then?

What an ignorant statement. Europe doesn't have this ridiculous tipping culture (parts do tip, but usually $1-$2 max) and yet we fill those positions. Surprisingly enough, if you pay someone a living wage for doing a job they tend to do it well.

He was making the point in the context of an american business making the decision not to accept tips. No server in their right mind would work for minimum wage and no tips when they could receive $1/hr + tips at a busy restaurant down the street. My guess is that most service industry jobs in European countries attract people with lower financial needs relative to their fellow citizens.

From my travels across the US, it was abundantly clear that not all restaurants and bars were busy, even in prime time.

It's pretty easy to see whether or not service is a well-paid job: do high-status people do it, and do people make a career of it (in general). And the answer is no. people do it when they're young and can't do anything else, and it burns them out. Few people stay in service. Yes, you can cherry-pick some good jobs out of service, but in general, people do it because they can't do something else... or do it while doing something else (like study).

So what? On my salaried job I sometimes have busy days, sometimes have quiet days. And?

I imagine that if you abolished tips, then the service sector would be like all those other sectors without tips, or like all those service sectors in all those other countries without tips, i.e. just another job and completely normal. But a lot fairer.

Here's a restaurant owner that agrees with grandparent:

http://jayporter.com/dispatches/observations-from-a-tipless-...

I've noticed many companies have this "tips included" built into the price which I think is a poor practice. Tips are supposed to be a way to reward excellent service and incentivize the employee to work hard. Having worked in a restaurant for 6 years I always tip well but I can say that honestly, I've had several experiences where the person didn't earn a tip. If you're going to include tips into the price, just pay them a flat salary and be done with because a mandatory tip isn't a tip at all, it's a surcharge.

All a tip is is employers tricking you, their customer, into paying their personnel costs (often upwards of 4/5ths of it!) directly. You don't "incentivise" someone to work hard by paying them the money they're actually owed by law [1].

[1] In the US, restaurants don't have to pay minimum wage unless the tips don't reach minimum wage (in which case, the company will make up the difference and then fire the employee for performance). The worst I've heard of was a working in an $8/hr state getting $1.20/hr.

You'll be paying those personnel costs either way. In a tipless society, your entree would just cost more, and the server would get their hourly regardless.

People like servers and drivers have an opportunity to provide extra value beyond their purely mechanical function. A culture of tipping allows the consumer to reward that extra effort, at their option.

That said, I do agree that 15-20% as a tip for 'standard' service is just silly. If I owned a restaurant, I'd want to hear about it if a customer was unhappy. When the customer can just stiff the server on their tip and leave, it gets harder to identify which workers need retraining/replacement.

> In a tipless society, your entree would just cost more

I live in a tipless society. Things cost exactly the same here (in Australia) as they do in the US. Difference is we don't have to pay extra on top of the meal.

We also get paid far far more. Minimum wage over here, in fast food, is $20 an hour.

> Things cost exactly the same here (in Australia) as they do in the US

That's not true. The cost of living in Australia is considerably higher than in the US. Melbourne and Sydney are both in The Economist's Worldwide Cost of Living top 10 (no US city is)[1].

Looking at food specifically, in 2011 one litre of milk was on average $2.21 USD in Australia, and a 1kg loaf of bread $5.24 USD.[2] In the US they were $1.80 and $2.80[3]. Half the price.

> Minimum wage over here, in fast food, is $20 an hour.

It's actually around $15 per hour. It varies a little with age[4][5]. Still quite high though. I'm not saying food prices necessarily directly connected with the minimum wage, just refuting the idea that in Australia food is the same price as the US. It simply isn't!

[1]:http://www.cfoinnovation.com/system/files/worldwide%20cost%2... [2]:http://www.liveinvictoria.vic.gov.au/living-in-victoria/cost... [3]:http://data.bls.gov/cgi-bin/surveymost?ap [4]:http://www.theatlantic.com/business/archive/2013/08/the-magi... [5]:https://www.fairwork.gov.au/pay/national-minimum-wage/pages/...

Service sector workers are most likely casual (ie not permanent part or full time) and thus their minimum wage is AUD$20.30/hr [1]

Tipping the scales further against America is that they are also fully covered by the national health insurance system, Medicare.

That said, it's hard to directly compare Australia and the USA - there's just too many variables. You are correct in that food is a little cheaper in the States; not 50% but probably 30% cheaper on average, from experience. Rent, too, is higher in Australia.

All things considered, though, I think it's pretty inarguable that a service sector worker is going to have a higher income and better quality of life in Australia. That's a consequence of deliberate economic policy. It's not without its negatives, of course - service hours in Australia are much less than in the USA, and certainly a factor in that is the higher cost of staff. For example, there is not a single 24-hour supermarket in Sydney!

[1] https://www.fairwork.gov.au/pay/national-minimum-wage/pages/...

> You'll be paying those personnel costs either way.

Obviously, but be honest about it. Don't tell me I can get a stake for $9 when I still have to pay taxes plus ~20% on top of the total to pay your employees.

I also hate this busy-body idea that the customers want a say in how much the server is paid to encourage "extra value beyond their purely mechanical function". That leads to annoying servers pestering me every five minutes looking to "add value". I want my servers to be as near to transparent as can possibly be. I didn't come there to talk to them, I came to have a good meal and enjoy the social company who came with me.

That's ridiculous - minimum wage is minimum wage. Performance incentive is performance incentive.

Were the unions asleep when that law got written?

I own a restaurant in California. CA is one of the states in the US where it is illegal for employers to use tips towards paying at least minimum wage. (Had to double check, so here's a source: http://www.dir.ca.gov/dlse/FAQ_tipsandgratuities.htm)

Not that I condone doing such a thing...it's a pretty sleazy employer that'll do such a thing.

> I always tip well

and there lies the problem.

The system seems completely transparent and unequivocal. If contractors sign up knowing that there are no tips, then there is no logical reason for them to expect tips.

They get tips. 20% of the fare is a tip, but Uber takes half of that.

I don't understand tipping (I'm from Aus) so whether this is kosher is beyond me.

On the contrary, if the customer is told that the tip is included, but then half of that money goes to Uber itself - that's completely not-transparent and equivocal.

Why can you sign away your right to legal recourse in some contract, one that you sign on your phone with a swipe of a finger? That's ridiculous.

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