Independent restaurants in New York City will be allowed to charge a COVID-19 Recovery Surcharge of up to 10% of a patron’s on-premise tab under legislation passed Wednesday by the city council.
The charge will be permitted from the day of the law’s enactment until 90 days after dining rooms in the city are expected to fully reopen. The add-on has to be broken out from other charges and labeled as a COVID-19 Recovery Surcharge. Guests also need to be informed that the charge is not part of tipped employees’ gratuities.
It can only be added for on-premise occasions, outdoor or indoor, and only by establishments that are not part of a chain of 15 or more units nationwide. The surcharge cannot be added to catering bills.
Mayor Bill de Blasio is widely expected to sign the measure into law before Sept. 30, when restaurants in the city will be allowed to reopen their dining rooms at 25% capacity. Indoor dining has been suspended since mid-March. The go-ahead to levy the surcharge would take effect immediately.
The proceeds are intended to help the city’s restaurants survive the pandemic. Industry groups have warned that thousands more will be forced to close for good unless government aid is forthcoming.
The measure addresses a peculiarity in the Big Apple’s laws. The city is believed to be the only major municipality in the nation to prohibit restaurants from adding surcharges to customers’ regular charges. COVID surcharges have been embraced in a number of other jurisdictions to help small businesses weather the coronavirus crisis, which mixed results.
Not all parties in the industry are happy about the measure. One Fair Wage, a union-supported group seeking to disallow the use of a tip credit, is arguing that the measure will siphon off money that might otherwise be used for gratuities.
“We need to support New York City’s restaurant industry during this unprecedented crisis, but as we do that we cannot just focus on restaurant owners, at the expense of restaurant workers," Saru Jayaraman, the president of One Fair Wage, said in a statement.
The group said it has secured a commitment from Council Speaker Corey Johnson to introduce a second measure that will allow the surcharge to remain in place while also extending protections to the industry's workers.