Uber adds tipping for drivers

Key Points
  • Uber will now let riders tip drivers.
  • It's part of a 180-day plan to make driving "more flexible and less stressful."
  • The decision comes as Uber CEO Travis Kalanick, who has objected to tipping, is on leave.
Uber adds tipping for drivers

Uber will now let riders tip drivers, addressing one of the most contentious features of its app amid turmoil within the company.

The ride-hailing start-up said Tuesday it would email drivers a 180-day plan to make driving "more flexible and less stressful." One of those features is tipping.

Riders in Seattle, Minneapolis and Houston will have the option as of Tuesday, the rest of the country will follow by the end of July, Uber said.

Other changes include paying drivers if their rider cancels after two minutes or more, and paying drivers who have to wait more than two minutes for their rider.

The decision comes as Uber CEO Travis Kalanick is on leave from the company.

Uber's former president, Jeff Jones, had been a proponent of tipping, which is already used by rival Lyft, Bloomberg News reported earlier this year. But Kalanick had a "principled" opposition to tipping, Bloomberg News said, arguing the practice tamps down wages. Jones has since left the company, citing in part the "approach to leadership."

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Kalanick, who is grieving the loss of his mother, also has said he is working on a new style of leadership during his absence. Uber has suffered a series of recent scandals, including an internal workplace culture investigation that ended in the dismissal of more than 20 employees.

Uber is also fighting legal battles over whether drivers should be classified as employees or independent contractors. Three New York Uber drivers were recently granted employee benefits by a judge, a ruling that could extend to "others similarly situated," according to Law360.

That's why it's important for Uber to revamp its image when it comes to how it treats workers, lawyers told CNBC last week.

While Uber headquarters might be undergoing a cultural makeover, the same protections won't necessarily extend to drivers if they are independent contractors, Brooke Schneider, an associate in the employment practice at Withers Bergman, told CNBC. That could stoke even more contention between executives and drivers, she said.

"I look at Uber as a workplace culture that has failed. So now we know, working at Uber is not always pleasant," said Kate Bischoff of tHRive Law & Consulting. "It's difficult, it seems to have this bro' culture. Each one of these individual cases now looks more credible. So yeah, if they are treating drivers poorly, there's a natural human response to take that seriously."

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