Bill Text: CA AB286 | 2021-2022 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Food delivery: purchase prices and tips.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Passed) 2021-10-05 - Chaptered by Secretary of State - Chapter 513, Statutes of 2021. [AB286 Detail]

Download: California-2021-AB286-Amended.html

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Amended  IN  Assembly  March 22, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill

No. 286

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Introduced by Assembly Member Members Lorena Gonzalez and Lee

January 21, 2021

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An act to amend Section 22598 of, and to add Sections 22599.1, 22599.5, and 22599.6 to, the Business and Professions Code, relating to business.

LEGISLATIVE COUNSEL'S DIGEST

AB 286, as amended, Lorena Gonzalez. Food delivery platforms. delivery: fees and tips.

Existing law, the Fair Food Delivery Act of 2020, defines a “food delivery platform” as an online business that acts as an intermediary between consumers and multiple food facilities, as defined, to submit food orders and arrange for the delivery of the order, and prohibits a food delivery platform from arranging for the delivery of an order from a food facility without first obtaining an agreement with the food facility.

This bill would state the intent of the Legislature to enact legislation that would relate to third-party food delivery company fees and commissions.

This bill would make it unlawful for a food delivery platform to impose specified charges on food facilities and customers, including making it unlawful to impose charges for a food facility’s use of the platform’s service that, in total, exceed 15% of an online order purchase price, as defined. The bill would make it unlawful for a food delivery platform to retain any portion of amounts designated as a tip or gratuity. The bill would also require a food delivery platform to disclose to the customer and the food facility a cost breakdown of each transaction, including prescribed information. The bill would provide that a violation of the act constitutes unfair competition. The bill would make the provisions of the act severable.

Digest Key

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 The Legislature finds and declares the following:

(a) On March 4, 2020, a state of emergency was declared by the Governor in response to the outbreak of the novel coronavirus, known as COVID-19. On March 19, 2020, the Governor issued a stay-at-home order to contain the spread of COVID-19.

(b) As a result of the stay-at-home order, residents were directed to stay at their place of residence except as needed to maintain continuity of operations for critical infrastructure sectors.

(c) As such, these necessary closures have had a drastic impact on local economies, with shutdowns heavily impacting the restaurant industry.

(d) Since the beginning of the pandemic, many restaurants have had to cease indoor dining and have largely had to transition to limited outdoor dining when COVID-19 transmission rates are low and to fully takeout operations.

(e) As a result of the stay-at-home order, a significant number of restaurants have turned to third-party food delivery companies that provide delivery services to supplant the loss of indoor and outdoor dining opportunities. To provide these services, third-party food delivery companies charge restaurants and customers various sets of commissions and fees for the act of delivering the food.

(f) Due to an imbalance in negotiating power, smaller restaurants have little to no ability to negotiate lower fees, with many restaurants regularly paying in excess of 30 percent of the purchase price in commissions, fees, and service charges.

(g) At a time when small restaurants are facing severe financial constraints, food delivery companies appear to be capitalizing on the COVID-19 crisis by charging restaurants higher fees and charges despite lower overall restaurant revenues.

(h) At the behest of small restaurants, many local jurisdictions in California have instituted ordinances that cap the commissions, fees, and service charges that third-party food delivery companies can charge. Despite these ordinances, enforcement has been difficult to track and manage due to variations in local ordinances, orders that traverse jurisdictions, and in some cases, the flouting of local ordinances by food delivery companies.

(i) Therefore, it is imperative that the state establish a statewide policy that is consistent across jurisdictions in order to provide relief to small restaurants and other food facilities, which are facing unprecedented financial burdens as a result of the COVID-19 pandemic.

SEC. 2.

 Section 22598 of the Business and Professions Code is amended to read:

22598.

For purposes of this chapter, the following definitions shall apply:

22598.

 As used in this chapter:

(a) “Food delivery platform” means an online business that acts as an intermediary between consumers and multiple food facilities to submit food orders from a consumer to a participating food facility, and to arrange for the delivery of the order from the food facility to the consumer.

(b) “Food facility” means a food facility, as defined in Section 113789 of the Health and Safety Code.

(c) “Online order” means an order for food or beverage placed by a customer through or with the assistance of a food delivery platform, including, but not limited to, a telephone order, for delivery.

(d) “Purchase price” means the price, as listed on the menu, for the items contained in an online order. This definition does not include taxes or gratuities that may make up the total amount charged to the customer of an online order.

SEC. 3.

 Section 22599.1 is added to the Business and Professions Code, to read:

22599.1.

 (a) It is unlawful for a food delivery platform to do any of the following:

(1) Charge a food facility any combination of fees, commissions, or costs for a food facility’s use of a food delivery platform’s service that totals more than 15 percent of the purchase price of each online order.

(2) Charge a food facility any amount designated as a delivery fee for an online order that does not involve the delivery of food or beverages.

(3) Charge a food facility any fee, commission, or cost other than as permitted in paragraph (1) or (2).

(4) Charge a customer any purchase price for food or beverage that is higher than the price set by the food facility.

(5) Retain any portion of amounts designated as a tip or gratuity. Any tip or gratuity shall be paid by a food delivery platform, in its entirety, to the person delivering the food or beverage.

(b) A food delivery platform shall disclose to the customer and to the food facility an accurate, clearly identified, and itemized cost breakdown of each transaction, including, but not limited to, the following information:

(1) The purchase price of the food and beverage.

(2) The delivery fee charged to the food facility.

(3) Each fee, commission, or cost charged to the food facility.

(4) Each fee, commission, or cost charged to the customer by the food delivery platform.

(5) Any tip or gratuity that will be paid to the person delivering the order.

SEC. 4.

 Section 22599.5 is added to the Business and Professions Code, to read:

22599.5.

 A violation of this chapter shall constitute unfair competition pursuant to Chapter 5 (commencing with Section 17200) of Part 2 of Division 7.

SEC. 5.

 Section 22599.6 is added to the Business and Professions Code, to read:

22599.6.

 The provisions of this chapter are severable. If any provision of this chapter or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

SECTION 1.

It is the intent of the Legislature to enact legislation that would relate to third-party food delivery company fees and commissions.