Uber Is Adding Tipping Option in App After Driver Unrest
The change is designed to improve relationship with drivers
(Bloomberg) -- Now that Chief Executive Officer Travis Kalanick has stepped aside indefinitely, Uber Technologies Inc. is making big concessions to clean up its image and keep drivers from defecting.
The most noteworthy addition is the ability for customers to tip their drivers inside the app. The company rolled out the option Tuesday in Houston, Minneapolis and Seattle, with plans to expand to every U.S. city by the end of next month.
Along with tips, Uber said it would start compensating drivers for trips canceled more than two minutes after booking and offer new insurance plans. It also said drivers would get paid more to chauffeur teenage passengers.
The San Francisco-based company is looking to appease drivers as it’s under pressure from a steady stream of scandals and slipping market share at home. The company ramped up a program in recent months called Uber Listen, where it sends representatives to ride along with drivers and collect their feedback while paying them for the time.
One of the most frequent complaints from drivers was the lack of a tipping feature within the app, which has long been offered by Lyft Inc., the primary U.S. alternative. The new policy, which is part of what Uber billed as “180 Days of Change,” eliminates an important advantage for Uber’s smaller foe, said Harry Campbell, who runs the Rideshare Guy, a popular blog among drivers.
“Uber adding a tipping option hurts Lyft big time because frankly, that was one of the only distinguishing factors,” Campbell said. “It’s definitely a step in the right direction.”
Lyft said this week that it has collected a total of $250 million in tips. It described Uber’s adoption of tipping as “fantastic news for drivers” in an emailed statement. “Lyft is closing in on 1,800 days of in-app tipping,” the company said.
“Today’s tipping announcement is an important win for drivers and proves that thousands of drivers coming together with one voice can make big changes,” Jim Conigliaro Jr., founder of a quasi-union known as the Independent Drivers Guild, said in an emailed statement. “Cuts to driver pay across the ride-hail industry have made tipping income more important than ever.”
Offering tips is a major reversal for Uber, which had promoted the simplicity of paying without tipping. It had previously suggested that tips could be used to racially discriminate. Kalanick had been opposed to asking customers for tips, arguing that restaurants and taxi companies have used tips as an excuse to underpay workers, people familiar with the matter have said. But Bloomberg reported in March that Uber executives were weighing whether to bend to public pressure and allow tips.
With Kalanick on leave after an exodus of top executives and company probes that found dozens of human-resources violations by staff during his tenure, Uber is now officially run by a committee of 14 executives. They are looking to make swift moves in an attempt to turn around the company’s reputation.
“Why now? Because it’s the right thing to do, it’s long overdue, and there’s no time like the present,” Uber said in a statement. “This is just the beginning. We know there’s a long road ahead, but we won’t stop until we get there.”
Uber has faced a string of controversies this year, including the departure of Jeff Jones, Kalanick’s No. 2. Jones was tasked with helping improve the company’s credibility with drivers, but he faced resistance internally and left after six months on the job. He was a major advocate for tipping.
Last week, the company shared the recommendations of an investigation it commissioned into workplace culture problems by the law firm of former U.S. Attorney General Eric Holder. More than 20 people were fired as part of a separate probe by another firm. Kalanick is on a leave of absence without a set return date and will take a diminished CEO role when he comes back.
Garrett Camp, an Uber founder and board member, wrote an email to employees Tuesday, trying to shore up morale. “Like many of you, recent events have left me upset and deeply reflective,” he wrote. “But what matters now is that we know what needs to be changed. We must update our core values, listen better to employees and riders, and prioritize our drivers.”
But as Uber has been addressing the treatment of its more than 14,000 white-collar employees, many of the company’s drivers, who are independent contractors, have felt ignored and mistreated. A video published by Bloomberg in February showed Kalanick arguing with an Uber driver. In it, the CEO said in a huff: “Some people don’t like to take responsibility for their own shit. They blame everything in their life on somebody else. Good luck!”
To contact the reporter on this story: Eric Newcomer in San Francisco at enewcomer@bloomberg.net.
To contact the editors responsible for this story: Mark Milian at mmilian@bloomberg.net, Andrew Pollack