Those 3, 5 and 20% fees at the bottom of your menu might just be here to stay. With little time to waste, a new law will allow restaurants and bars to continue charging service fees, health fees and other surcharges when these are clearly communicated to diners. This practice was to be banned from Monday.
SATURDAY, Gov. Gavin Newsom signed Senate Bill 1524, an emergency measure to exempt California food and beverage vendors from Senate Bill 478 — a law The measure will take effect in July and will target ticket sellers, hotel and travel websites and other businesses that charge “hidden” or “unwanted” fees.
Before Newsom signs BS 1524which was introduced At the beginning of June, Restaurants and bars were included in the affected businesses, and Attorney General Rob Bonta had advised food and beverage vendors to build the fees into their menu prices to avoid the possibility of legal action.
“These misleading fees prevent us from knowing up front how much we will be charged,” the attorney general, who co-authored SB 478, said in a statement the day it was signed. Bonta could not be reached for comment on the exemptions allowed under SB 1524.
Many service industry operators spoke out against SB 478, which was passed in October. They said they feared list prices would increase during the a tumultuous year marked by closures and inflation It would cost them more customers and support. Several restaurant owners told the Los Angeles Times that the process of overhauling or completely revamping their tipping and surcharge systems could result in employees losing benefits or closing their businesses altogether. The rules in SB 1524 allowing such surcharges could affect tens of thousands of restaurants across the state.
“We are the most regulated business in the world and we are struggling to survive in the broken system that has been imposed on us over decades,” said Eddie Navarrette, co-founder of the Independent Hospitality Coalition, a restaurant advocacy group . “When you add more regulations of any kind, it makes things more difficult. Things are already difficult… there is a mass exodus from our community of small restaurateurs. I think it’s a huge relief, just to have one less thing imposed on them right now. »
Navarrette spent weeks campaigning for the 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 restaurant industry, whose tip-based employee revenue differentiates it from most of the fields that will be affected by SB 478.
Surcharges, health fees and service charges are regularly used in the industry to stabilize wages in dining rooms and kitchens — where servers often get tipped but cooks and dishwashers don’t — and to help offset the cost of benefits such as health care. Companies with higher service charges, such as 18% or 20%, often note that no tips are expected.
“It’s hard to understand why restaurants are saying they have to do things differently, because it feels like they’re saying they have to hide the cost of their food from us, and that doesn’t seem fair,” said said Jenn Engstrom, state director of the California affiliate of Public Interest Research Group (CALPIRG), a nonprofit organization that advocates for consumer interests and protections.
“It’s like you’re being cheated,” she said. “That’s what it feels like: that they’re trying to cheat you.”
Some local restaurants have being under fire from criticism over accusations of misuse of service charges or other surcharges, although several chefs and restaurateurs told the Times that these “bad actors” are few and far between.
“Every restaurateur I know who is interested in this industry is using it in such an appropriate, responsible and forward-thinking way that if it were to disappear it would be truly crippling for everyone,” said Ryan Bailey, restaurateur from Kato, to the Times earlier this year.
The new bill, which passed the state Assembly and Senate unanimously in late June, was co-authored by Sen. Bill Dodd (D-Napa) — who also co-authored SB 478 — along with 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 Assn. and the Unite Here union, both of which represent thousands of California hospitality workers.
SB 1524 “will allow restaurants to continue to support increased pay equity and contribute to worker health care and other benefits,” Matthew Sutton of the California Restaurant Assn. said in a statement. “And, most importantly, consumers will continue to be able to make informed choices about where they choose to dine out.” »
While some restaurateurs and bar operators are breathing a sigh of relief that service fees will remain in place, others are frustrated by the government’s rapid change of course.
In April, before SB 478 went into effect on July 1 — but before the new exception for restaurants and bars — L&E Oyster Bar and sister restaurant El Condor incorporated their 4 percent service charge into their listed menu prices.
(Ricardo DeAratanha/Los Angeles Times)
Following the attorney general’s direction for SB 478 in April, restaurateur Dustin Lancaster added a 4% markup to menu prices of two of his Los Angeles restaurants, L&E Oyster Bar and El Condor. He said SB 1524 would not prompt him to return to a service fee model, at least in the foreseeable future, and that it was not “that easy to unlock the pie.”
“It’s unfortunately all too familiar territory for restaurants in California,” Lancaster told the LA Times this week. “Just like with COVID, they’re pushing us around and expecting us to pivot and change our model repeatedly as if it’s not a problem for small businesses. Restaurants continue to close at an alarming rate in Los Angeles, and this kind of unnecessary flip-flopping is why California continues to be the least small business-friendly state in America. »
At Bell’s, a Michelin-starred restaurant in Los Alamos, Santa Barbara County, the owners have been diligently following the progress of the two state Senate bills and waiting for final word before determining whether to eliminate their 20 percent service charge, which benefits all non-management staff.
And even before SB 1524 passed, Bell’s listed the fees on its lunch and dinner menus, its frequently asked questions webpage and the takeout section of its homepage. The new law will allow the restaurant to continue doing so without reconfiguring its business model.
Greg Ryan, owner of Bell, told the Times that he had listened to and understood customers, legislators and his team, and that he wanted to do what was best for his staff.
For months, this practice has resembled a balancing act.
As SB 1524 made its way through the California Assembly and Senate, protests on social media and in public forums such as Reddit were swift and loud, with many anonymous contributors commenting that in revenge for the exemption, they would stop tipping. Another Reddit user created a spreadsheet which tracks surcharges and service charges at restaurants across the state.
A Los Angeles restaurateur, speaking anonymously for fear of retaliation from his customers, told the Times that he saw an increase in tips of 1.0 percent or other small amounts during the month, perhaps in response to the 3-4% service. the fees their restaurant charged.
“I’m not thrilled with the bill,” CALPIRG’s Engstrom said of SB 1524. “I think it was better when restaurants and bars also had to have very clear upfront pricing, so consumers could easily make comparisons. When I decide to go to a restaurant with my family, I check the prices first, on the menu, online.
The fact that bill SB 1524 requires clear disclosure of fees is a plus, she said, but it is not as strong as bill SB 478, which initially called for integrating fees of service in the prices displayed. Engstrom called SB 478 a “great model bill,” saying she would like to see similar consumer protection legislation in other states, or at the federal level, without too many exceptions for industries, regardless of how service fees are factored into their business plans.
“I think the SB 1524 bill is unfortunately a step backwards, but it remains transparent,” she said. “You can always see it, you just have to do the math. »