Bill Introduced During Small Business Week and on Same Day as Council Approved Allen’s Food Delivery Fees Legislation
Today, DC Councilmember Charles Allen (Ward 6) is introducing legislation to help DC restaurants and small businesses recover and thrive, recognizing many continue to struggle in recovering from the pandemic amid a changing economic and legal landscape.
“I’ve had many Ward 6 small restaurants ringing the alarm that they’re struggling even as our recovery continues,” said Councilmember Allen. “The industry is going through a lot of change, and smaller restaurants and businesses, compared to larger businesses, have fewer resources to come back from after a difficult few years. This bill aims to make life easier for our favorite restaurants, the ones that make our neighborhoods truly special, to ensure they can thrive.”
The Helping Small Businesses Recover and Thrive Amendment Act of 2023 (PDF of bill available here) has several components to make it easier to run a restaurant or small business:
- Increasing the real estate tax credit available to qualifying small businesses from $5,000 to $10,000 and tying it to inflation. The rebate is based on rent paid during the previous year and is limited to businesses under a certain revenue threshold.
- Prohibiting sales tax from being imposed on service fees at restaurants, ensuring parity between service fees and tips.
- Clarifying that, absent any contrary language, service fees aren’t considered sales for the purposes of calculating rent in a commercial lease, again ensuring parity between service fees and tips.
- Allowing small businesses to receive written notice of license renewals by the Department of Licensing and Consumer Protection (“DLCP”) to provide ample notice of upcoming deadlines.
- Modifying requirements for bar manager licensure, allowing businesses to cover the credential on an annual basis or three-year basis. This would allow bars and restaurants to avoid paying for a license for a worker who might not otherwise remain with the business for the entire three-year license period.
- Mandating the development and launch of a public awareness campaign to educate District residents, visitors, and others who frequent restaurants across the city about upcoming changes to the tipped minimum wage.
- Allowing sexual harassment training to be administered virtually instead of only in-person for all employees, including managers, like many other businesses, companies, and non-profit organizations.
- Prohibiting the charging of swipe fees on the sales tax portion of a credit or debit card transaction.
The bill was co-introduced by Councilmembers Trayon White, Parker, Nadeau, Robert White, Pinto, and Frumin.
Additionally, during today’s legislative meeting, the Council unanimously passed Councilmember Allen’s emergency legislation, the Food Delivery Fees Transparency Emergency Amendment Act of 2023, providing stronger protections for restaurants that use delivery service apps like DoorDash or Uber Eats. The emergency legislation ensures that a business that selects to pay the minimum 15% commission fee package can’t be excluded on the apps only for not paying more in commissions.
Since a pandemic-imposed cap on delivery fees of 15% was lifted, delivery app companies have started to push small restaurants to agree to higher fees or risk not appearing in searches they otherwise would appear in (such as by type of food). Today’s bill addresses issues around discoverability (showing up in searches you should appear in), delivery radius around restaurants, and requiring the delivery apps to clearly state what services are included with each commission fee tier.
“The fees come out of the restaurant’s cut, not as a special charge to the customer. Restaurants are feeling the squeeze trying to just break even when fees creep up, and they feel like they have to be on these apps to reach customers,” said Allen. “I don’t think most customers realize what these apps are doing. There’s a good chance your food could take longer to arrive, and that your final bill could be much higher than you anticipated. It’s a classic case of the market importantly stepping in to fill a gap but then going too far. We need some commonsense guardrails to protect restaurants, drivers, and customers. And today we got there.”