AB 286 Limits Food Delivery Fees

On October 5, 2021, Governor Gavin Newsom signed into law Assembly Bill 286 by Assemblywoman Lorena Gonzalez (D-San Diego), to limit charges by food delivery platforms.

Section One of the bill amends Section 22598 of the Business and Professions Code to add definitions of “online order” and “purchase price.” Existing law already provides definitions of “food delivery platform” and “food facility.”

Section Two of the bill adds Business and Professions Code Section 22599.1 to make it unlawful for a food delivery platform to do either of the following:

• Charge a customer any purchase price for food or beverage that is higher than the price posted on the food delivery platform’s internet website by the food facility at the time of the order.
• Retain any portion of amounts designated as a tip or gratuity. Any tip or gratuity for a delivery order must be paid by a food delivery platform, in its entirety, to the person delivering the food or beverage. Any tip or gratuity for a pickup order must be paid by a food delivery platform, in its entirety, to the food facility.

In addition, the bill requires a food delivery platform to disclose to the customer and to the food facility an accurate, clearly identified, and itemized cost breakdown of each transaction, including, but not limited to, the following information:

• The purchase price of the food and beverage.
• A notice, if applicable, that the food delivery platform charges a fee, commission, or cost to the food facility, unless the food facility directs that the food delivery platform disclose to customers the delivery fee charged to the food facility and each fee, commission, or cost charged to the food facility.
• Each fee, commission, or cost charged to the customer by the food delivery platform.
• Any tip or gratuity.

Section Three of the bill adds Business and Professions Code Section 22599.6 to provide a severability clause.