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Mayor Muriel Bowser signed the latest COVID-19 emergency legislation yesterday, and the moment pen hit paper, the 15 percent commission fee cap on third-party delivery companies such as Grubhub, Uber Eats, and Doordash took effect. These apps typically charge closer to 30 percent commission—an amount restaurant owners have said they can barely stomach during normal times, let alone when their sales are down 60 to 80 percent without on-premise consumption.
Seattle and San Francisco passed similar temporary measures earlier this spring, and New York City signed onto a 20 percent commission fee cap yesterday.
The District’s order explicitly prohibits delivery companies from retaliating by cutting drivers’ wages or garnishing their tips. It also requires increased transparency. When a customer sees the final price they’re expected to pay for delivery food through one of these platforms, the company is required to “disclose, in plain language and in a conspicuous manner, any commission, fee, or any other monetary payment imposed by the third-party food delivery platform on the restaurant.”
Some parts of the order will be easier to enforce than others. “We’re going to need the customer to be the police here, to say what they’re seeing on their bill, and we need the restaurants to be very vigilant because I suspect that these big companies have lawyers looking into how they can [get] around [the cap],” says Ward 3 Councilmember Mary M. Cheh, who drafted the language for the fee cap legislation with Council Chairman Phil Mendelson. “That’s not the spirit that we have for this. We want to put a cap on it so that the margins for restaurants, which are already so thin, are not further eroded.”
The Department of Consumer and Regulatory Affairs will enforce the new rules. A DCRA spokesperson says if someone believes a third party delivery service is violating the emergency order, they should start by completing this business complaint form or call DCRA customer service at (202) 442-4400. According to the order, violations can come with fines between $250 and $1,000.
Delivery companies continue to strongly oppose the fee cap. Before the Council passed the legislation, leaders from Uber Eats, Grubhub, DoorDash, and Postmates wrote a joint letter to Mendelson on May 3 asking the Council to back down.
Postmates wrote its own letter to the Council, also on May 3, in which it argued that the commission fee cap “aids only those restaurants that partner with us, many of which are members of large national chains or prominent restaurant groups … It does nothing to help the hundreds of restaurants that do not partner with us, many of which are independent, minority-owned restaurants in wards hardest hit by COVID-19.”
There are hundreds of small, independently owned restaurants on Postmates in D.C., from Ethiopian favorite Habesha Market and taqueria Bandit Taco to Restaurant Judy and HalfSmoke. All of these restaurants are minority owned. The letter then dives further into race: “The COVID-19 emergency has laid bare a terrible inequity: African-Americans represent nearly half of all total positive cases in the District as of this writing but 79% of all COVID-19 deaths.”
Postmates suggests that instead of a fee cap, the city should create a fund “capitalized by a small fee on every transaction processed by a third-party delivery service.” They suggest a transaction surcharge of 50 cents or a dollar and say it “could raise a far, far greater amount than a select few restaurants save by way of the commission cap.” Postmates suggests using the fund to support healthy markets or lure grocery stores to food deserts.
Even though the fee cap is now mandated, the companies are still fighting.
“This is exactly the wrong proposal,” writes Grubhub spokesperson John Collins in an email. “Any arbitrary cap—regardless of the duration—will lower order volume to locally owned restaurants, increase costs for small business owners, and raise costs on customers. Delivery workers would have fewer work opportunities and lower earnings. We also believe that any cap on fees represents an overstep by local officials and will not withstand a legal challenge.”
One DoorDash driver who requested anonymity tells City Paper she’s worried that the fee cap will adversely affect her, but says it hasn’t happened yet. “I’m worried they’ll take it out on drivers,” she says.
A representative from Uber Eats says they have already implemented the lower commission fee temporarily mandated by the order, despite the fact that they continue to oppose it.
“Often when we do things, affected companies say, ‘We’ll have to leave the District,’” Cheh says. “They say the sky is falling. But the sky doesn’t fall.”
Photo by Paul Sableman / CC BY