California Passes AB-286, Further Regulating Food Delivery Platforms

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On October 5, 2021, Governor Newsom approved AB-286, which adds further regulations for food delivery platforms. The law will take effect on January 1, 2022. Last year, California passed the Fair Food Delivery Act of 2020 (AB-2149), which prohibits food delivery platforms from arranging for the delivery of food delivery orders without the express authorization of the food facilities, and which went into effect on January 1, 2021.

This 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 posted on the food delivery platform’s internet website by the food facility at the time of the order.

The bill also makes it unlawful for a food delivery platform to retain any portion of amounts designated as a tip or gratuity. Food delivery platforms will be required 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.

Lastly, the bill requires food delivery platforms to disclose to the customer and the food facility a cost breakdown of each transaction. The cost breakdown must include: (1) The purchase price of the food and beverage; (2) a notice 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; (3) each fee, commission or cost charged to the customer by the food delivery platform; and (4) 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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