Following a last-minute intervention by Governor Gavin Newsom, California restaurants add additional surcharges on customers’ invoices to make sure soaring cost of doing business within the Golden State.
In its original form Senate Bill 478Authored in June by Senators Bill Dodd (D-Napa) and Nancy Skinner (D-Berkeley), the bill would have banned junk fees on a wide range of businesses, including bars, delivery apps, travel firms, ticket sellers, hotels and restaurants.
The purpose of the law is to “prohibit the advertising, display or offering of a price for a good or service that does not include all mandatory fees or charges, except for any taxes or fees imposed by a government on the transaction, as specified.”
Restaurant operators and worker organizations rejected the primary version of the bill earlier this 12 months, expressing concerns that Increase menu prices to cover fees that help offset higher salaries And Healthcare.
SEE ALSO: California restaurants mustn’t be shocked that the law banning junk fees also applies to them
“Service charges are increasingly common tools to keep restaurants afloat and enable them to pay higher minimum wages at a time when minimum wage requirements are rising rapidly at the state and local levels,” in keeping with the Employment Policies Institute, a nonprofit research organization that studies job growth. said in a press release“Since the state began offering annual wage increases of up to $16.50 an hour in 2017, and local governments have increased wages even further, California restaurants have suffered significant losses. Now restaurants are being stripped of that tool, further damaging the industry and its employees.”
After there was strong response to the bill – partly triggered by the bill’s initiator, Attorney General Rob Bonta Emphasis that restaurants and bars can be included in the trouble to eradicate junk fees – Senator Dodd introduced an emergency amendment within the late session, Senate Law 1524that will exempt restaurants and bars from its original bill. Instead, the brand new law now requires dining establishments to list additional fees “clearly and conspicuously,” with an evidence of the surcharges in “an advertisement, menu, or other posting.”
Governor Newsom signed the law on the last minute on Saturday, June 29.
“This short-term change is significant for restaurants that are constantly facing challenges. This change could save many in the industry from losing their jobs,” said Pam Waitt, president of the Orange County Restaurant Association.
With the signing on Saturday, “we can uphold the principle of providing upfront price transparency to consumers without inadvertently harming grocery workers or small businesses,” Senator Dodd wrote shortly after Governor Newsom's approval. in a press release dated 29 June“Now we can ensure that restaurant customers don’t get a shock when they get their bill.”
“Restaurants are essential to life in California and should be able to cover their costs as long as they do so transparently,” added Senator Scott Wiener (D-San Francisco), co-author of the brand new bill. said in the identical press release“SB-1524 clarifies parts of the law that pose a serious threat to restaurants. The bill strikes the right balance between supporting restaurants and ensuring transparency for consumers, and I am proud to support it.”
Under the brand new law, which took effect immediately on Monday, July 1, it have to be clearly stated on the menu when a restaurant adds a service charge to the bill. According to Senator Dodd, it “cannot be a surprise that only appears on the bill.”
The surcharges are a contentious issue for California restaurant patrons, with pros and cons: Some see them as a solution to help service staff and business owners make ends meet in one of the crucial expensive states within the country, while others see them as a bait and switch.
In August 2023, restaurants in Los Angeles and Orange County created publicly accessible spreadsheets detailed information concerning the fees charged by restaurants.
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