DoorDash, Uber Eats, Grubhub must disclose hidden fees, give delivery workers all tips under new California law

DoorDash, Uber Eats, Grubhub must disclose hidden fees, give delivery workers all tips under new California law

California will soon give tip protections to delivery workers and require more transparency from DoorDash Inc. and other food-delivery apps under a bill signed into law by Gov. Gavin Newsom on Tuesday night.

AB 286 requires delivery apps like DoorDash DASH, 2.31%, Uber Eats UBER, 2.94% and Grubhub GRUB, -0.46% to give delivery workers all their tips. The bill also prohibits food-delivery apps from charging customers more than restaurants do. And it addresses hidden fees by requiring the companies to disclose to restaurants and customers a detailed cost breakdown of each transaction.

“Gig companies have profited during the pandemic by keeping consumers and restaurants in the dark about the true cost of their services,” said state Assemblywoman Lorena Gonzalez, D-San Diego, who wrote the bill, in a statement. “Now, small restaurants and their customers will know what they’re being charged upfront and get to see exactly how much is actually benefiting the restaurant.”

The bill, which will take effect Jan. 1, 2022, is the latest of many efforts to regulate the burgeoning app-based food-delivery industry. At the beginning of the coronavirus pandemic last year, municipalities adopted emergency delivery-fee caps. This year, San Francisco and New York City enacted permanent fee caps, sparking lawsuits from DoorDash, Uber Eats and Grubhub. And New York City last month passed first-in-the-nation legislation that would establish minimum pay for delivery workers, give them access to restaurant bathrooms and more.

DoorDash, which has faced questions about how much its drivers keep in tips and last year settled a lawsuit by Washington, D.C., accusing it of applying tips to workers’ base pay, says on its website that its delivery workers keep all their tips. Uber Eats and Grubhub also say tips go straight to the drivers.

DoorDash said it had no comment on the signing of AB 286. Grubhub and Uber have not returned requests for comment.

Meanwhile, Newsom vetoed another bill, AB 1444, which would have dictated that agreements between restaurants and food delivery platforms be written and include certain content. It also would have restricted delivery platforms from charging restaurants for forwarded calls unless those calls resulted in an order, and required listing websites to disclose whether ordering through them would result in forwarding a call and a fee paid to a third party other than the restaurant.

In his veto message, Newsom said “We have significantly increased oversight of food delivery companies in recent years.” The governor also mentioned that the delivery platforms have said they no longer charge restaurants simply for forwarding calls.

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