Late Saturday night, California Governor Gavin Newsom signed Senate Bill 1524, allowing restaurants to continue charging service fees.
The bill, an emergency measure, exempts food and beverage vendors from the broader Senate Bill 478. This last-minute legislation ensures that these surcharges remain, provided they are clearly disclosed on menus.
Background on the 2023 Law
The 2023 law aimed to eliminate hidden fees that businesses added to customer bills.
These “junk fees” often surprised consumers, leading to frustration. Initially, restaurants were included in this legislation, which led to significant pushback from the industry.
Senator Bill Dodd’s Role
Senator Bill Dodd of Napa was a key figure in amending the law to allow restaurants to keep service fees.
He emphasized transparency, stating, “We made it clear they can’t just change it without putting it in clear and concise type on the menu on every single page.” This ensures customers are well-informed.
California Restaurant Association’s Opposition
The California Restaurant Association (CRA) argued that the initial law should not apply to restaurants.
They claimed that menu items do not qualify as “goods” or “services” under California’s civil code. The CRA’s lobbying efforts were instrumental in the passage of SB 1524.
Conditions for Retaining Surcharges
Restaurants can continue to charge surcharges if they clearly disclose these fees on their menus.
Full compliance is required within a year, allowing establishments to update their menus and meet the legal requirements. This aims to prevent any surprises for customers.
Consumer Reactions
Many consumers appreciate the transparency brought by the new amendment.
Jarrett Powers from San Jose said, “I don’t think it’s a bad thing it’s still there because it’s going to workers or at least it should be going toward workers.” This sentiment is shared by many who see the benefits for restaurant staff.
Impact on Restaurant Operations
For restaurants, this amendment provides operational flexibility. They can continue to charge surcharges but must ensure these fees are clearly communicated.
This balance aims to protect consumers while supporting businesses during a challenging economic period.
Ensuring Legal Compliance
Legal compliance is crucial for restaurants to avoid penalties. Clear communication on menus is mandated to adhere to the new law, preventing any misinterpretation by customers.
This ensures that all charges are transparent and understood by diners.
Local Restaurant Strategies
Many local restaurants have already started implementing strategies to comply with the new law. For instance, Bell’s, a Michelin-starred restaurant in Los Alamos, has been diligently listing their 20% service charge on menus and their website.
This proactive approach ensures that diners are well-informed and helps the restaurant maintain a positive relationship with its patrons while adhering to legal requirements.
Broader Implications for Consumer Protection
This legislation reflects a broader trend towards consumer protection and transparency, whether it’s involving food or concert tickets.
By regulating how additional charges are disclosed, it aims to build trust between businesses and consumers. The clear listing of fees helps consumers make informed decisions.
Response from the Hospitality Industry
Eddie Navarrette, co-founder of the Independent Hospitality Coalition, noted, “When you add more regulations, it makes things more difficult.”
“There is a mass exodus of our small-restaurant community. I think it’s a huge relief, just to have one less thing being thrown at them right now.”
The Role of Transparency in Building Trust
The new legislation requires restaurants to be transparent about their fees, which is important for building trust with customers.
By clearly listing these charges, restaurants can ensure that patrons are not caught off guard, fostering a more positive dining experience.
