Those 3, 5 and 20% fees at the end of your menu could be here to stay. With little time to spare, a new law will allow restaurants and bars to continue charging service fees, health care costs and other surcharges when they are clearly listed for diners to see. The practice was set to be outlawed on July 1.
On Saturday, Governor Gavin Newsom signed Senate Bill 1524, an emergency measure that would exempt California food and beverage vendors from Senate Bill 478: A Bill which will go into effect at the beginning of the month and is aimed at ticket sellers, hotel and travel websites and other companies that charge “hidden” or “junk” fees. Before Introduction of SB 1524 in early June, restaurants and bars were included among the affected professions, with Atty. General Rob Bonta advises that restaurants and bars include surcharges in menu list prices to avoid the possibility of legal action.
“These deceptive fees prevent us from knowing how much we will be charged up front,” said Attorney General Rob Bonta, who co-sponsored SB 478, in a statement on the day of its signing. Bonta could not be reached for comment on SB 1524.
Numerous service industry operators have spoken out against SB 478 since its passage in October, fearing that the increase in list prices during A tumultuous year marked by closures and inflation will only result in further loss of customers and support. Several restaurateurs told the Los Angeles Times that the process of reviewing or completely overhauling their tipping and surcharge system could result in the loss of staff benefits or outright closures. The passage of SB 1524 and the continuation of these surcharges could affect tens of thousands of restaurants across the state.
“We are the most regulated sector of all and we are fighting to survive in the broken system that has been imposed on us for many, many decades,” said Eddie Navarrette, co-founder of the restaurant advocacy group Independent Hospitality Coalition. “When more regulations are added, whatever they may be, things get complicated. Things are already difficult…there is a mass exodus from our small restaurant community. “I think it’s a big relief to have one less thing being imposed on them right now.”
Navarrette spent weeks campaigning for passage of SB 1524, writing letters, meeting with more than 35 policy advisers, legislators or their representatives, knocking on doors at the State Capitol and explaining the use of service fees within the tip-based restaurant industry, which operates uniquely compared to most other fields that will be affected by SB 478.
Surcharges, health fees and service charges are commonly used in the industry to stabilize wages in dining rooms and kitchens (where waiters typically receive tips, but cooks and dishwashers do not) and to help offset the cost of benefits such as health care. Companies with higher service fees, such as 18% or 20%, often state that tips are not expected.
“It’s confusing why restaurants are saying they need to do things differently, because it just seems like they’re saying they need to hide the cost of their food from us and that doesn’t feel right to us,” said Jenn Engstrom, the state director of the California affiliate of the Public Interest Research Group (CALPIRG). The nonprofit advocates for the interests and protection of consumers. “It feels like they’re tricking you, that’s what it feels like — that they’re trying to trick you.”
Some local restaurants have be under fire for alleged misuse of charging service fees or other surcharges, although several chefs and restaurant owners told the Los Angeles Times that these “bad actors” are few and far between.
“Every restaurateur I know who cares about this industry is using it in such an extremely appropriate, responsible and forward-thinking way that if it were to go away, it would be really detrimental to everyone,” Kato restaurateur Ryan Bailey told 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-authored 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 Association and the Unite Here union, which represents thousands of hospitality workers in California.
“This [SB 1524] “This will allow restaurants to continue to support greater pay equity and make contributions to worker health care and other employee benefits,” Matthew Sutton of the California Restaurant Association said in a public statement. “And, importantly, consumers will continue to have the ability to make informed decisions about where they choose to dine out.”
While some restaurant and bar owners are breathing a sigh of relief at the continuation of service charges, others are frustrated by the government's swift change of stance.
In April, ahead of SB 478's July 1 deadline, L&E Oyster Bar and sister restaurant El Condor added their 4% service fees to menu list prices.
(Ricardo DeAratanha / Los Angeles Times)
According to the Attorney General's guidance for SB 478, in April, restaurateur Dustin Lancaster added a 4% surcharge to menu list prices of two of his restaurants in Los Angeles, L&E Oyster Bar and El Condor. He said that in light of SB 1524, he won't return to a fee-for-service model, at least for the foreseeable future, and that “it's not that simple to just undo the pie.”
“Unfortunately, this is all too familiar territory for California restaurants,” Lancaster told the LA Times this week. “Just like Covid, they manipulate us and expect us to pivot and change our model repeatedly as if it's no big deal for small businesses. Restaurants continue to close [at] “An alarming rate in Los Angeles and this kind of unnecessary change in attitude is why California remains the least favorable state for small businesses in the United States.”
At Bell's, a Michelin-starred restaurant in Los Alamos, owners diligently followed the progress of both Senate bills and awaited the final word before determining whether to eliminate the 20% service charge, which benefits all non-staff. executive. Prior to the passage of SB 1524, Bell's position was already listed on the lunch and dinner menus, on the website's FAQ page, and on the home page regarding takeout orders; The new law will allow the restaurant to continue its practice without reconfiguring its business model.
Greg Ryan, owner of Bell's, he told the Times who listens and understands clients, legislators and his team, and wants to do what is best for his staff.
For months, the practice has felt like a balancing act.
As SB 1524 moved through the California Assembly and Senate, the outcry on social media and public forums like Reddit was swift and forceful, with multiple anonymous posts commenting that they will begin leaving 0% tips in retaliation to the exemption. Another Reddit user created a spreadsheet which tracks surcharges and service fees at restaurants across the state.
A Los Angeles restaurant owner who requested anonymity for fear of customer retaliation told The Times that they noticed an increase of $1.0% or other low tips over the course of the month, possibly due to 3-4% service fees charged at the restaurant. restaurant.
“I'm not very happy with the bill,” said Jenn Engstrom of CALPIRG. “I think it was better when restaurants and bars also had to have very clear prices from the beginning, so that consumers could easily compare prices. When I decide to go to a restaurant with my family, I first look at the prices on the menu, on the Internet.”
The fact that SB 1524 requires clear posting is a benefit, he said, but it's not as strong a bill as SB 478 with its initial guidance from the attorney general that called for including service fees in list prices. Engstrom called SB 478 “a great model bill” and would love to see similar consumer protection legislation in other states, or at the federal level, without many exceptions for industries, regardless of how service fees are incorporated into your business plans.
“I think this [SB 1524] “Unfortunately, it is a step backwards, but it remains transparent,” he said. “You can still see it, you just have to do the math.”
