California’s restaurant owners are up in arms over a new law targeting so-called “junk fees,” hidden costs tacked onto bills. These fees, often surprising diners at the end of a meal, are now banned under the legislation. As the industry grapples with this change, owners worry about job losses and the return of tipping models that many see as less fair.
California Restaurants Clash with New Law
California restaurant owners are enraged over a new law that bans “junk fees.” The legislation aims to eliminate hidden charges, effective July 1.
Senate Bill 478 Targets Hidden Fees
Signed by Governor Gavin Newsom last year, Senate Bill 478 will require businesses to include all mandatory fees in advertised prices. This includes service fees and other surcharges that were previously added on top of the listed price.
Attorney General Clarifies Restaurant Regulations
California Attorney General Rob Bonta’s office clarified that restaurants cannot add surcharges to listed prices, including non-voluntary gratuity payments. This move emphasizes that the advertised price must be the final price paid by the customer.
Ensuring Compliance and Fairness
Bonta emphasized the simplicity and fairness of the new law, which ensures the price displayed is the price paid. He expressed confidence that this guidance will help businesses and consumers alike in maintaining a fair marketplace.
Industry Pushback on Fee Ban
Matthew Sutton of the California Restaurant Association criticized the law’s interpretation, arguing it misunderstands restaurant pricing standards. He indicated that the association might challenge the implementation of SB 478.
San Francisco Restaurants Especially Impacted
San Francisco restaurants, which often charge a surcharge to meet local health care ordinances, are particularly concerned. They fear the law’s impact on service fees could disrupt their pricing structure and employee compensation.
Concerns Over Tipping and Worker Pay
There is also worry that replacing service fees with tipping could lead to uneven pay for workers. Restaurant owners argue that mandatory service fees ensure more equitable compensation.
Radical Shift in Restaurant Business Practices
Laurie Thomas, executive director of the Golden Gate Restaurant Association, warned that the new law disrupts long-standing business practices. She emphasized that if operators can’t adapt, job losses and a return to the less equitable tip model are likely.
Confusion Over Mandatory Service Fees
Mandatory service fees, often exceeding 20 percent, have led to confusion among diners about additional tipping expectations. Critics argue that these fees create ambiguity and may complicate the dining experience.
Concerns About Sticker Shock
Opponents of the law worry that including all fees in menu prices could cause “sticker shock” for customers. This could discourage dining out and hurt the restaurant industry already struggling to recover.
Industry Faces Increased Uncertainty
Yuka Loroi, owner of Cassava restaurant, expressed concern that the law adds to existing uncertainty in the industry. She fears that the initial impact could be negative, further challenging an already hard-hit sector.
