GrubHub No Longer Forces Restaurants to Dip Into Tips

The New York State Attorney General has just reached a settlement with Seamless/GrubHub (now known as just GrubHub) to prevent it from dipping into delivery workers' tips. Up until now, the online food delivery service has charged restaurants a fee based on the total amount, including tip, that a customer pays for an order, at rates of up to 20 percent. That practice in itself is not illegal, but it was causing restaurants to withhold a portion of the tip from delivery workers, which is illegal under New York State law.

According to the Wall Street Journal, the Attorney General began investigating the issue after delivery drivers sued Upper West Side restaurant Indus Valley for withholding tips from them. Now the investigation has come to an end and a judge has ruled that GrubHub can no longer factor in tips when calculating its service fees. The website will also have to make it clear to all of its partner restaurants that they are legally obligated to hand over 100 percent of tips to delivery workers. The ruling applies immediately to all new GrubHub restaurants, and GrubHub will have to issue new contracts to its existing restaurant clients within a year.
· Seamless Delivers Tips Agreement [WSJ]
· All Coverage of Seamless/GrubHub [~ENY~]