The 3, 5 and 20% charges at the bottom of your menu may be here. With little time to spare, the new law will allow restaurants and bars to continue charging service charges, health charges and other surcharges when they are clearly listed for review. The practice will be banned from Monday.
Dino on Saturday, Governor Gavin Newsom signs Senate Bill 1524, an emergency measure to exempt California food and beverage vendors from Senate Bill 478 — the law which took effect in July and targets ticket sellers, hotel and travel websites and other businesses that charge “hidden” or “junk” fees.
Before Newsom entered SB 1524which is introduced in early June, restaurants and bars are among the affected businesses, and Atty. General Rob Bonta has advised that food and beverage vendors roll such fees into the listed menu prices to avoid the possibility of legal action.
“This fraudulent fee prevents us from knowing how much we will be charged at the outset,” the attorney general, who co-sponsored SB 478, said in a statement signed today. Bonta could not be reached for comment on the exemptions allowed by SB 1524.
Many business operators in the service industry have been vocal against SB 478, which passed in October. They said they were afraid of raising the list prices during tumultuous years marked by closures and inflation it will cost more customers and support. Many restaurants told the Los Angeles Times that the process of overhauling or overhauling the tipping system and additional fees could lead to the loss of employees or closure altogether. SB 1524 allows for these additional fees to affect tens of thousands of restaurants across the country.
“We’re the most regulated business out there, and we’re struggling to survive in a broken system that’s been handed to us for decades,” said Eddie Navarrette, founder of the Independent Hospitality Coalition, a restaurant advocacy group. “When you add more regulations, anything, it can be difficult. Everything is already difficult … there’s been a mass exodus from the small restaurant community. I’m very relieved that there’s only one that’s been thrown out now.
Navarrette spent a week campaigning for the passage of SB 1524, writing a letter, meeting with up to 35 policy advisors, legislators or representatives, knocking on the door of the state Capitol, and explaining the use of service fees in the restaurant industry, which employees are based on tips. earnings make a difference from many fields that will be affected by SB 478.
Surcharges, health fees and service fees are often used in the industry to stabilize wages in dining rooms and kitchens — where servers often receive tips but cooks and dishwashers do not — and help offset the cost of benefits such as health. Businesses with larger service fees, such as 18% or 20%, often note that tips are not expected.
“It’s confusing why the restaurant is saying they have to do it differently, because it seems like they’re just saying they have to hide the cost of the food from us, and it doesn’t feel right,” Jenn Engstrom said. , the state director of the California affiliate of the Public Interest Research Group (CALPIRG) a non-profit organization that advocates for consumer interest and protection.
“It feels like you’re being scammed,” he said. “That’s what it feels like: he’s trying to trick you.”
Some local restaurants have it come to the fire about allegations of misuse of service charges or other surcharges, although some chefs and restaurateurs told The Times that these “bad actors” are few and far between.
“Every restaurant that I know who cares about this industry uses it in a very appropriate and responsible and forward-thinking way if it goes away, it’s going to cripple everybody,” said Kato restaurateur Ryan Bailey. The Times earlier this year.
The new bill, which passed unanimously in the state Assembly and Senate in late June, was co-authored by Sen. Bill Dodd (D-Napa) – who also co-wrote SB 478 – as well as Sen. Scott Wiener (D- San Francisco) and Assembly members Matt Haney (D-San Francisco), Jesse Gabriel (D-Encino) and Cecilia Aguiar-Curry (D-Winters).
It is supported by the California Restaurant Assn. and the Unite Here labor union, both of which represent thousands of hospitality workers in California.
SB 1524 “will enable restaurants to continue to support increased efforts to pay and to contribute to worker health and other employee benefits,” said Matthew Sutton of the California Restaurant Assn. said in a statement. “And, importantly, consumers will retain the power to make informed choices about where they choose to eat.”
While some restaurateurs and bar operators breathed a sigh of relief at the continued service charge, others were frustrated by the government’s quick change in tack.
After the guidance of the attorney general for SB 478, in April restaurant Dustin Lancaster Rolled 4% surcharge to menu list prices from his two LA restaurants, L&E Oyster Bar and El Condor. He said SB 1524 won’t prompt him to return to the fee-for-service model, at least for the foreseeable future, and it’s not “so easy to cut the pie.”
“This is, unfortunately, very familiar territory for restaurants in California,” Lancaster told the LA Times this week. “Like in COVID, they surround us and expect us to spin and change our model over and over as if it’s not a problem for small businesses. Restaurants continue to close (at) an alarming rate in LA, and this unnecessary face is why California continues to be the least business-friendly state in America.
At Bell’s, a Michelin-starred restaurant in Los Alamos, Santa Barbara County, the owners are diligently tracking the progress of the state Senate bill and waiting for the final word before deciding whether to eliminate the 20% service charge, which benefits all nonmanagerial staff.
Even before SB 1524, Bell listed the cost on its lunch and dinner menus, on its webpage for frequently asked questions, and on its homepage section about ordering takeout. The new law will allow the restaurant to continue its practice without reconfiguring its business model.
Greg Ryan, owner of Bell’s, told The Times he has listened and understood his customers, legislators and team, and he wants to do what is best for his staff.
For months, the practice felt like a balancing act.
As SB 1524 passed through the California Assembly and Senate, the outcry on social media and in public forums such as Reddit was swift and vocal, with several anonymous posters commenting that in retaliation for the exemption, they would stop leaving tips. Another Reddit user was created a spreadsheet which tracks surcharges and service charges at restaurants across the country.
The LA restaurateur, who spoke anonymously for fear of customer retribution, told The Times that he would see a tip increase of $1.0% or a small amount during the month, possibly in response to the 3-4% service the restaurant charges.
“I don’t like the bill,” CALPIRG’s Engstrom said of SB 1524. “I think it’s better if restaurants and bars also have clear up-front prices, so consumers can do easy comparison shopping. When I go out to a restaurant with my family, I check the price first, in the menu, online.
That SB 1524 requires a clear posting of the Fees is a benefit, he said, but it is not as strong as SB 478 with the initial guidance of the attorney general which is called for service fees Rolling to the listed prices. Engstrom called SB 478 “a good model bill,” saying he would like to see similar consumer protection laws in other states, or federally — without many carve-outs for the industry, regardless of whether the cost of service factors into the business plan.
“I think (SB 1524) is unfortunately a step backwards, but it’s still transparent,” he said. “You can still see it; you just have to do the math.”