The question of whether passengers should tip Uber drivers is about to get a whole lot messier.
On Thursday night, Uber reached a tentative $100 million settlement for a couple of high-profile cases in California and Massachusetts involving its classification of drivers as contractors. Most notably, it allows Uber to keep its drivers as contractors instead of employees, the real crux of the lawsuit. Among other things, the company also agreed to clarify its driver tipping policy in a way that appears to be in favor of tipping.
But this isn’t the tipping revolution Uber drivers were hoping for.
While the settlement proposal makes it clear that drivers nation-wide are allowed to accept tips from passengers—and technically they’re free to post signs in their cars encouraging tipping—there are some caveats. For example, while posting signs in their cars won’t be a reason Uber will deactivate them from the service, the company does warn that they can lead to lower ratings from riders if they’re bothered by the signs. And low ratings are still a cause for deactivation, so this is getting tricky.
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On top of that, Uber confirmed to Fortune that it has no plans to add a tipping feature to its app. This brings up the question of how these tips will be paid.
Sure, some riders may have cash in their wallets. Drivers could even get a credit card reader from Square (or another provider), or even devise a clever way to utilize payment apps. Regardless of the method, it would make tipping feel like a lot of work, and that may turn off some riders. That leads to the potential low ratings that riders could receive from the drivers, if the passengers don’t tip because they didn’t have cash on hand. (And the Uber generation has grown accustomed to not carrying cash, so this is bound to happen.)
So this could turns into a great opportunity for rival Lyft, which has always provided a tipping feature in its app, letting riders add a gratuity before confirming their payment. (In fact, Lyft’s fares were originally “suggested donations,” though social norms meant riders pretty much always paid). It wouldn’t be surprising if consumers who don’t want to worry about carrying cash turn to Lyft to ensure they can always tip.
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So what did the settlement proposal change in regards to tipping Uber drivers?
It turns out, it’s all about clarifying policies and language. For years, the common misconception that “tips are included” in the Uber fare led many riders to skip on giving their drivers a tip. But looking at a receipt, revealed the price only includes the fare and a “booking fee,” formerly known as the “safe ride fee.” There were no tips.
Now, Uber’s policy says “there’s no need to tip,” leaving it open to the interpretation of drivers and riders—and some potentially awkward ride endings.
