DoorDash and Uber Lose NYC Tip Law Appeal, Court Allows 10% Prompt to Take Effect

DoorDash Inc. (DASH) and Uber Technologies Inc. (UBER) failed in their attempt to block a New York City law mandating a 10% or higher tip prompt at checkout, as a federal judge denied their request for an injunction on Friday. The law, set to take effect on January 26, requires food delivery apps to display suggested tips prominently, which DoorDash estimates could lead to millions in annual losses due to reduced customer orders. The companies argue the regulation infringes on their free-speech rights by limiting how they communicate tipping options. However, US District Judge George Daniels ruled the requirements were not overly burdensome and aligned with the city’s goals of improving cost transparency and protecting delivery workers. This decision supports Mayor Zohran Mamdani’s push for stricter app-based work regulations, following similar legal actions against other delivery services like Motoclick. DoorDash and Uber plan to appeal the ruling, contending that the new policy will harm small businesses, lower customer satisfaction, and reduce earnings for delivery drivers. The case highlights ongoing tensions between gig economy platforms and local governments over worker pay standards. (Updates with comment, DoorDash and Uber appealing the ruling)