California Legislature Passes AB-286 Third-Party Delivery Platform Law

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On September 1, 2021, the California State Assembly joined the California State Senate in passing Assembly Bill 286, which will regulate food delivery platforms throughout the state. The bill passed with bipartisan support in both chambers, with a 55-8 vote in the Assembly on September 1, and a 27-8 vote in the Senate on August 23, 2021. The bill was introduced in January 2021 and now awaits Governor Newsom’s signature.

There are three main aspects of the bill: (1) it prohibits third-party platforms from charging more than the price set by the food facility; (2) it makes it unlawful for the food delivery platform to retain any portion of tips, whether those tips are for the delivery driver or for the food facility; and (3) it requires that food delivery platforms provide a cost breakdown of each transaction to both customers and the restaurants.

Prices To Be Set By Restaurants

The bill makes it unlawful for a food delivery platform to charge a customer any purchase price for food or beverage that is higher than the price set by the food facility and posted on the food delivery platform’s internet website by the food facility at the time of the order.

Tips and Gratuities

The bill also makes it unlawful for a food delivery platform to retain any portion of amounts designated as a tip or gratuity. The bill requires a food delivery platform to pay any tip or gratuity for a delivery order, in its entirety, to the person delivering the food or beverage, and to pay any tip or gratuity for a pickup order, in its entirety, to the food facility.

Cost Breakdown

Lastly, the bill requires food delivery platforms to disclose to both customer and restaurant/food facility a cost breakdown of each transaction. The cost breakdown must include 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; and any tip or gratuity.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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