On June 3, 2020, the Los Angeles City Council adopted an ordinance capping third-party food delivery services fees at 15% for the duration of the COVID-19 public health emergency. The ordinance will become part of the City’s Municipal Code.
The new ordinance makes it unlawful for a third-party food delivery service to charge a restaurant a fee per online order of more than 15% of the purchase price of the order. The ordinance is designed to protect the restaurant industry during the COVID-19 pandemic, when dine-in was prohibited. The ordinance is set to expire 90 days after the City’s March 19, 2020 Public Health Order prohibiting dine-in service is lifted. That March 19, 2020 order was replaced with a June 1, 2020 SAFER L.A. Order, which permits limited dine-in service under strict social distancing guidelines.
The ordinance also provides protections for consumers and for delivery drivers. Consumers may not be charged a price higher than the price set by the retain food establishment on the third-party delivery service. Consumers are also to be provided with a clearly itemized cost breakdown for each transaction. Additionally, delivery services may not retain any portion of amounts designated by customers as gratuities or tips for drivers.
The 15% cap was passed unanimously at a City Council meeting on May 20, 2020, and the ordinance was subsequently drafted by the Los Angeles City Attorney.
A copy of the ordinance is available here.