Saturday, December 19, 2020

Gov. Jay Inslee Caps Third-Party Delivery App Fees Statewide

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On Thursday, November 19, Gov. Jay Inslee announced a statewide cap on fees charged to restaurants by third-party delivery apps such as Uber Eats, DoorDash, and GrubHub. The proclamation caps delivery fees at 15 percent and total fees at 18 percent for each order, and goes into effect Wednesday, November 25, at 12:01 a.m. Though several cities and counties across the country have applied caps on third-party apps, the broad mandate is a rarity for U.S. states — New Jersey instituted a similar rule in June and Massachusetts had one in the works as well, but it hasn’t been signed into law yet.

Seattle already has a 15 percent cap in place, announced earlier this summer, so not much will change here. “Localities can opt for something more strict if they want, but this will now be the baseline for the entire state,” says the governor’s communications director Mike Faulk. At the time that Seattle’s rule was announced, several third-party delivery services objected to the cap, saying that costs would be passed on to customers. DoorDash noted that it had already slashed its commission and marketing fees by half through May due to the COVID-19 crisis, and called a similar proposal in Chicago to cap fees at 5 percent unconstitutional.

DoorDash spokeswoman Campbell Matthews says, “We recognize the challenges Washington restaurants are facing, and the difficult decisions Governor Inslee must make as we work to stop the spread of COVID-19 and support our local communities. We remain concerned that pricing regulations like this one could result in higher costs for customers, which could lead to fewer orders for local restaurants and fewer earning opportunities for Dashers.”

The new order from Inslee comes not long after his new ban on indoor dining went into effect, expected to last at least until December 14. The Washington Hospitality Association (WHA) and democratic state lawmakers have recently pushed back on the restrictions, urging Inslee to reconsider. WHA estimated that 100,000 jobs in the service industry may be lost as a result of the indoor dining ban, and called for more financial assistance. Addressing third-party fees was one of the measures mentioned by the organization in a recent conference call, though it looks like this order is only temporary, since the cap applies only until dining rooms are allowed to open again at 50 percent capacity.

“We recognize the challenges posed by COVID-19 to our restaurant community, and we’re grateful to third-party delivery platforms that have made it possible for Washingtonians to continue supporting local restaurants, and allowed many businesses to stay open,” Inslee said of the new mandate in a statement that may raise some eyebrows. After all, the level of support apps have shown to restaurants remains in question, considering this mandate was necessary in the first place.

Correction: An earlier version of this article stated that Washington was the first state to cap delivery fees, but New Jersey had a similar ordinance in June at 20 percent.

This post was originally published on Eater

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