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New York City's taxi and black car regulator plans to require Uber Technologies to add a tipping feature to its app by July.
Drivers have long complained that Uber has resisted such a move, even as other ride-hailing companies offer a way for customers to add gratuity.
Uber is facing a similar push in California, where a state lawmaker introduced a bill early this year that would require ride-hailing companies to accept tips via credit cards
If Uber is forced to adopt tipping in its two most important U.S. markets, it wouldn't make much sense to refuse to do so elsewhere. Uber drivers have been asking for a tipping option for years.
As Uber faces myriad controversies this year, it's locked in intense competition with Lyft Inc. for drivers, and any worker who feels tipping is important can easily switch to Uber's rival.
A pro-tipping rule in New York would be a big victory for the Independent Drivers Guild, an organization that Uber helped set up last year in conjunction with the International Association of Machinists and Aerospace Workers, a trade union.
The drivers guild has made tipping a priority in recent months and pushed the New York City regulator to take action. The group said the rule could mean $300 million of additional income for Uber drivers in New York each year if passengers tip at the same rate as in yellow cabs.
Meera Joshi, who leads the New York's Taxi and Limousine Commission, framed the decision as a way to improve life for the city's professional drivers.
"This rule proposal will be an important first step to improve earning potential in the for-hire vehicle industry," Joshi said in a statement.
Alix Anfang, an Uber spokeswoman, declined to criticize the idea of a rule requiring tipping, although she said in a statement that no one at the company has seen the proposal.
"In New York City, we partnered with the Machinists Union to make sure current and future Uber NYC drivers have a stronger voice," she said.
Uber has never shied away from a fight with policymakers, and its sanguine response to the proposed tipping rules points toward a shift in its thinking. Uber has previously argued against allowing tipping.
Last year, it agreed to give tacit approval for drivers to seek tips as part of a legal settlement-while also distributing academic research arguing that customs surrounding tipping were arbitrary at best and discriminatory at worst. Jeff Jones, Uber's former president who resigned recently, had advocated internally for in-app tipping.
Settling the tipping dispute is unlikely to bring the tension between Uber and its critics to an end.
Worker advocates continue to push for policies that would require Uber to treat its drivers as employees, rather than independent contractors.
Jim Conigliaro, the drivers guild's founder, said on a call with reporters that the group is also interested in regulations that would require Uber to pay a living wage or cap the number of Uber drivers in New York so that those on the roads will have an easier time making a living.
Given its past stances on such issues, Uber would likely fight those much more vigorously than a tipping rule. Conigliaro says he's happy to take the victory on tipping-for now.
"The exploitation of ride-hailing drivers must end, and this is an important first step," he said.