Marketing

New bill would allow restaurants in California to continue using service fees and other surcharges

Consumers would need to be alerted to the add-ons ahead of time. The measure's proponents are asking that it be passed before most surcharges are outlawed starting July 1.
Guests would have to be informed of the pending fees before this stage. | Photo: Shutterstock

The sponsor of the California law that bans most add-on restaurant charges as of July 1 has asked that a follow-up bill be rushed through the statehouse beforehand to narrow the scope.

The second bill would allow restaurants to continue charging service fees, mandatory gratuities and other surcharges as long as customers are alerted to the add-ons before they order. The heads-up would have to be delivered on advertisements as well as on menus.

The measure, AB 1524, has the endorsement of the California Restaurant Association. Unite Here, a union that represents restaurant and hotel workers, has joined the association in supporting the bill.

It has been introduced in the state Senate by Bill Dodd, a Democrat representing Napa. He was also the author of AB 478, a truth-in-advertising bill aimed at outlawing so-called junk fees, the add-ons that some sellers of goods and services slip onto a customer’s bill after the patron has made a purchasing decision. The example often given is the service fees that many concert-ticket sellers tack onto their quoted prices after an order is placed, regardless of whether any additional service is rendered.

The state attorney general had initially indicated that such common restaurant charges as service fees and a fee for credit-card payments would not be covered. But the state officer, Rob Bonta, reversed his position in early May. In an explainer presented in FAQ form, the attorney general indicated that restaurants would have to present customers with one final charge before they ordered. Subsequent fees would be banned unless the proceeds raised went directly and entirely to employees.

Dodd’s new bill in effective mandates clarity rather than an end of add-ons. It’s been tagged as an urgency measure, meaning quick action is requested from congressional leaders.

Seldom do unions align with restaurant trade organizations in supporting legislation. But in this case, both labor and employers were opposed to killing restaurant service fees, which often go toward payroll and paying for benefits.

“Cutting the pay of banquet servers and ballpark workers was never the intention of SB 478, as the bill’s authors have made clear,” Mario Yedidia, Western political director for the union, said in a statement. “Unite Here is proud to cosponsor this amendment.”

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