California restaurants are grappling with uncertainty following a recent declaration by California Attorney General Rob Bonta’s office that a new state law banning extraneous fees also applies to restaurants. The law, known as SB 478, aims to ensure transparency in pricing for consumers. However, many restaurant operators were taken aback by the announcement, as they had assumed that restaurants would be exempt from the law.
The inclusion of restaurants under SB 478 has sparked concerns among restaurateurs who have been adding fees to cover rising costs, particularly for wages, without increasing menu prices. Some fear that they may have to significantly raise prices to sustain current wage levels, potentially impacting customer demand.
The Employment Policy Institute, a national organization that monitors employment issues from a business standpoint, criticized Bonta’s declaration, stating that it would further harm California’s restaurant industry, which has already experienced significant losses due to rising minimum wages. The organization argues that service charges have been a tool for restaurants to navigate these challenges.
SB 478 was sponsored by Bonta and a coalition of consumer groups, following President Joe Biden’s pledge to eliminate what he refers to as “junk fees” across various industries. The bill gained final approval in September 2021 and is set to take effect on July 1, 2022.
The legislation aims to address deceptive pricing practices, such as bait-and-switch advertising, by requiring businesses to be transparent about the full cost of goods and services. Critics argue that businesses should be upfront about their operating costs and avoid misleading customers with lowball prices.
As the restaurant industry navigates the implications of SB 478, some are calling for greater transparency in pricing and a reversal of the recent trend towards secretive decision-making in the Legislature.
For more information, contact Dan Walters at dan@calmatters.org.