LA City Council Caps Delivery Fees at 15%

Ervin Cohen & Jessup LLP

Ervin Cohen & Jessup LLP

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.

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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