The following article was written by our partners at Fisher & Phillips LLP.
Restaurants’ reliance on food delivery apps soared during the pandemic because they provide a convenient way for customers to order from local restaurants and an easy solution for processing restaurant payments and sourcing third-party drivers to pick up meals and deliver them to customers. According to MarketWatch, the four major food delivery app companies had roughly $5.5 billion in combined revenue from April through September 2020, which was more than twice as much as their combined $2.5 billion in revenue during the same period in 2019. In partnering with these food delivery apps, restaurants were able to reach their customers during both the shutdown and the subsequent reopening.
However, restaurants are charged around 30% per order, which means using these apps can cut significantly into a restaurant’s already paper-thin profit margins. With these watered-down profits, restaurants may be tempted to assign myriad tasks to tipped and nontipped workers alike, including preparing orders for food app customers. If you assign such tasks to tipped employees, however, you’ll want to read on to learn more about your obligations under the “new” 80/20 Rule, whether putting together orders for food app customers could be considered tip-producing work, and gather five tips to avoid legal troubles.
