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‘This should have never happened’: Lawmakers want to let restaurants keep charging fees

A restaurant counter with place settings of plates and silverware is shown. Tablets displaying "PAY HERE" are placed at intervals. In the background, chefs work in an open kitchen.
Restaurant surcharges were set to go the way of the dinosaur on July 1. Not so fast, say a group of state lawmakers. | Source: Sarah Holtz/ SF Standard

Restaurant surcharges—including the increasingly common service and healthcare fees levied by local eateries—were due to be banned in July when SB 478, a new state law outlawing so-called “junk fees,” was set to go into effect.

But state lawmakers—including San Francisco assemblymember Matt Haney and state Sen. Scott Wiener—are looking to carve out an exemption to the ban for restaurants they claim were unintended collateral damage.

State sens. Bill Dodd and Wiener are introducing SB 1524, which aims to allow restaurant surcharges if they are displayed conspicuously on restaurant menus. The lawmakers say the bill is meant to clarify a blind spot in the previous law.

“Restaurants are vital to the fabric of life in California, and they should be able to cover costs as long as they do so transparently,” Wiener said in a statement.

Sponsored by Attorney General Rob Bonta and state Sens. Dodd and Nancy Skinner, SB 478 was signed by the governor into law last year. The law was meant to protect consumers from hidden charges tacked on credit cards, bills, loans, air travel, hotel rooms and event tickets.

But when the attorney general’s office clarified the automatic charges that restaurants put on the bill to help afford city-mandated healthcare costs, replace tips, and pay for large group service would also be prohibited, there was widespread surprise and dismay from the industry.

Restaurant owners argued that these fees made it possible to sustain living wages for staff and boost pay equity, even as some consumers hailed the change.

What’s more, SB 478’s authors did not intend for the law to impact restaurant surcharges. In other words, it’s a big whoopsie.

The lawmakers said the new bill would have to be rushed through the committee process to be signed by the governor before July 1, when SB 478’s surcharge ban is set to go into effect.

“Many restaurants are up-front with their business practices, but too many aren’t, necessitating action,” Dodd said in a statement. “This proposal will level the playing field for all restaurants and address confusion and disagreement about what is permissible under state law.”

Haney, who is also listed as a co-author of the bill, apologized for not considering restaurants when crafting SB 478.

“This should have never happened in the first place,” Haney said on a conference call discussing SB 1524. “I’m sorry that we’re having this conversation.”