Food Delivery App Bill to Increase Price Transparency, Tip Protections, Signed by Governor

A bill that removes hidden fees from food-delivery app companies, as well as increase transparency and give workers tip protections, was signed by Gavin Newsom into law on Tuesday.

Assembly Bill 286, authored by Assemblywoman Lorena Gonzalez (D-San Diego), will specifically make charging 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 illegal. AB 286 will also force food delivery platforms to not retain any part of the amount in deliverer tips, with tips either to go directly to the individual deliverer or to the restaurant to be paid out to the deliverer later. Finally, all fees and purchases must now be listed up front on the receipt to avoid any hidden fees charged by the app company.

The bill has been through a tumultuous nine months in the California legislature, with Gonzalez heavily amending the bill several times in an effort to get it passed. While it did originally have the section of the bill to itemize costs and be more transparent, it also included many limitations, such as limiting food delivery fees to 15% of the purchase price, an action that would have led to a major loss with small orders. Further amendments continued to water down the language, as both delivery companies and those against some parts of the bill pushed for a balance of allowing the delivery companies, such as DoorDash, Grubhub, Postmates, and Uber Eats, to continue operating while also giving customers an open view of charges and deliverers tip protections.

The changes led many Democrats, as well as some Republicans on the fence, to either switch to an aye vote or not voting at all, allowing it to be passed in the Senate in August and in the Assembly in September.

App delivery workers, consumer advocates, and legislative supporters celebrated the bills signing on Tuesday, noting that AB 286 is only one of several new laws to bring more regulation to the still-new industry.

“Gig companies have profited during the pandemic by keeping consumers and restaurants in the dark about the true cost of their services,” said Assemblywoman Gonzalez in a statement on Tuesday. “Now, small restaurants and their customers will know what they’re being charged upfront and get to see exactly how much is actually benefiting the restaurant.”

In a follow-up tweet she added that “Our Food Delivery Bill AB 286 was signed by Gavin Newsom today! All fees have to be disclosed, tips have to go to workers. This, along with our wage theft bill means if DoorDash or any other app takes drivers tips again, whatever Executive signed off on it could go to jail!”

Our Food Delivery Bill #AB286 was signed by @GavinNewsom today! All fees have to be disclosed, tips have to go to workers.

This, along with our wage theft bill means if @DoorDash or any other app takes drivers tips again, whatever Executive signed off on it could go to jail! ????

— Lorena Gonzalez (@LorenaSGonzalez) October 6, 2021

While the delivery companies have yet to react to the new bill as of Wednesday, many restaurant owners had mixed feelings of the new bill.

“We have a real love-hate relationship with (the delivery companies),” said Annette, a restaurant co-owner in Los Angeles. “During the pandemic, when everyone was in lockdown, these companies helped us survive. At one point we calculated we had maybe a few months to go on. We were in a backroom doing the bills, and when we got out front, we saw that a bunch of orders had come in with a bunch of Grubhub guys on the way.”

“On the other hand they can really screw you. I know many restaurants pre-pandemic that did NOT want to have these guys come and pick up orders as it cut into their restaurant deliveries and they fought tooth and nail to get the delivery companies to pull their restaurants down from their site. And during the pandemic, no one knew about all the tacked on fees it seems.”

“The bill was necessary but it also seemed off-base. With restrictions now being removed more and more with the pandemic waning, restaurants want to see more choice to have these companies be used. That’s what we are really looking at. Not losing money.”

While Newsom did veto other delivery app bills on Tuesday, such as AB 1444, which would have regulated agreements between restaurants and delivery apps, nothing else signed into law by Newsom proved to be directly related to AB 286, which is set to become law on January 1, 2022.