Legislation that would make it easier for restaurants to set food prices without including additional fees is moving through the Capitol at lightning speed.
Two Assembly committees on Tuesday approved new Senate Bill 1524, which would exempt restaurants from a law passed last year requiring businesses to include any service charges, fringe benefits or other items in prices they offer to customers.
When passed, the 2023 legislation, SB 478, was hailed as a major reform aimed at making consumers more aware of their final bills. Attorney General Rob Bonta, who sponsored the bill, was particularly boastful.
“Today, California is eliminating hidden fees,” Bonta said in a joint statement with the authors. “These misleading charges prevent us from knowing upfront how much we will be charged. They are bad for consumers and bad for competition. They cost Americans tens of billions of dollars every year. They hit families hardest just trying to make ends meet.
“With the signing of SB 478,” Bonta continued, “California now has the most effective legislation in the nation to address this problem. »
Sen. Bill Dodd, a Napa Democrat and co-author of SB 478, agreed, saying, “With the Governor signing this historic bill, we can finally tackle the dishonest unwanted fees that are being added to everything from online concert tickets. to hotel reservations.
SB 478 takes effect July 1. But a few weeks ago, Bonta’s office issued a notice that restaurants would have to comply with the new law, and restaurateurs and unions reacted, saying they assumed their extra fees would be exempt.
Dodd quickly seized SB 1524, which was parked in the Assembly, removed its language and inserted new verbiage allowing restaurants to exclude fees from their menu prices if their menus include “clear and conspicuous” notices stating that such fees exist.
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So, customers should look for such warnings on menus — even so, SB 1524 would give restaurants an extra year to insert the language into their menus.
Restaurant industry lobbyists and union officials say SB 478 would effectively eliminate negotiated service fees and therefore deprive employees of income. This is, however, a specious argument. Nothing in the new law prohibits restaurants from incorporating fees into their listed prices and using the revenue for any purpose.
The real reason the industry doesn’t like the new law is the fear that disclosing full meal prices will discourage customers from dining out. In other words, they want to continue their bait-and-switch tactics with the blessing of Parliament.
When SB 478 was heard in legislative committees last year, Bonta sent representatives to emphasize his support.
For example, Eleanor Blume, Bonta’s aide for economic justice, told the Assembly Privacy and Consumer Protection Committee that she “is proud to sponsor SB 478 to end hidden fees in California,” adding, “Companies use hidden fees or unwanted fees. offering an artificially low overall price to attract a customer before revealing additional fees later in the purchasing process.
However, no one from Bonta’s office testified Tuesday during SB 1524, suggesting he does not oppose the exemption for restaurants. Bonta is a very likely candidate for governor in 2026, and his main rival could be Lt. Gov. Eleni Kounalakis, who is running as a co-sponsor of the new bill alongside the California Restaurant Association.
Gov. Gavin Newsom, himself a restaurateur, will likely have the final say on whether California consumers get screwed while politicians play games.
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