Los Angeles Mayor Eric Garcetti signed an ordinance to cap third-party food delivery app fees at 15 percent, effective immediately.
The law, which Garcetti signed June 5, will affect delivery apps such as Postmates and Uber Eats. They will not be able to ask restaurants for more than a 15 percent fee per order, or more than 5 percent fee for its non-delivery services.
In addition to the fee cap, 100 percent of tips must be given to delivery drivers who work for the third-party apps.
“With this temporary cap on delivery fees, Los Angeles is helping save local restaurants and keep their workers on the job during this economic upheaval,” Mayor Garcett said. “More Angelenos are ordering restaurant delivery and takeout due to the coronavirus, and this legislation will prevent delivery app companies from charging excessive commissions so restaurants can stay in business.”
The Los Angeles City Council unanimously passed the motion on May 20, with the thought that it would help small businesses during the COVID-19 pandemic, as restaurants were often asked to pay third party apps up to 30 percent of each order’s final price.
The law was written to be enforced during the pandemic, at a time when restaurants were more reliant on pick-up and delivery, with the future dine-in services unclear.
Councilmember Mitch O’Farrell, who wrote the legislation, said that because of the pandemic, “Restaurants went from having a fraction of their sales from delivery, to between 70 and 90 percent of their current sales.”
With in-restaurant dining allowed since June 1, the law will only take effect for 90 days, meaning it will be lifted August 29. The third-party apps also get a 15-day grace period to adjust their practices.