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GrubHub is tight-lipped after agreement with NY AG over tips

by Abby Sun
Apr 17, 2014


Abby Sun, MEDILL

Ken Holloway, an owner of Cafe Corner, delivers orders himself and hopes to get the full amount of tips paid online by customers.

GrubHub Inc., the Chicago-based taker of restaurant orders, declined to say Thursday whether its agreement to give customers' online tips to food deliverers applies outside New York.   


New York State Attorney General Eric Schneiderman announced Wednesday that GrubHub, whose subsidiary Seamless Inc. operates in New York, had agreed to distribute to delivery workers the full amount of tips paid online by customers.


A statement by GrubHub on Thursday said only that it has “worked closely with the N.Y. State Attorney General's office to ensure that our policies and practices are in compliance with all applicable New York labor laws.” The attorney general's press release said the agreement resulted from a yearlong investigation by his Labor Bureau, commenced before Seamless was acquired by GrubHub last summer.


Abby Hunt, GrubHub’s director of public relations, said Thursday in an e-mail, "the inquiry was only into Seamless restaurants in the NY area, as they had a different way of billing restaurants.”


Calls to several Chicago restaurants that use GrubHub's service elicited no complaints regarding GrubHub's handling of tips.


GrubHub takes 10 percent to 20 percent of every online order including tips, said Ken Holloway, one of the owners of Café Corner at 2144 W. Van Buren. "The higher percentage they take, the higher they put you on their page.”


Café Corner’s business has increased by 20 percent since joining GrubHub three months ago, Holloway said, amounting to about $300 to $400 coming in every week from GrubHub orders.   


Holloway said he didn’t consider the tips an issue because working with GrubHub “definitely helped the business a lot.” However, he would be happy if GrubHub disbursed to deliverers the whole amount of tips paid online, as customers presumably intended.