CA Governor Newsom Signs Emergency Bill Allowing Restaurants to Keep Service Fees, With a Catch

By: Sam Watanuki | Last updated: Jul 08, 2024

Late Saturday night, California Gov. Gavin Newsom signed emergency legislation. This law allows restaurants to keep surcharges in place, provided they clearly disclose the additional charges.

The new legislation amends a 2023 law aimed at eliminating “junk fees.”

Background of the 2023 Law

The 2023 legislation was introduced to tackle “junk fees” that many businesses added to customer bills.

Advertisement
Lawyer fills out paperwork on a desk with a judges gavel beside him

Source: Freepik

These fees often appeared as surprises, leading to consumer frustration. Restaurants were initially included in this law.

The Role of Senator Bill Dodd

Senator Bill Dodd of Napa was instrumental in the latest amendment.

Advertisement
A photograph of a lawyer meeting with a client

Source: Freepik

He emphasized the importance of 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.”

California Restaurant Association's Opposition

The California Restaurant Association (CRA) opposed the initial law, arguing it shouldn’t apply to restaurants.

Advertisement
Gavin Newsome pictured standing during a speech

Source: Getty Images

The CRA claimed that menu items do not qualify as “goods” or “services” under California’s civil code.

Conditions for Keeping Surcharges

While restaurants can keep surcharges, they must ensure that these are clearly disclosed. This requirement aims to prevent any surprises for customers when they receive their bill.

Advertisement
Person Sitting in Front of Tacos on Plate

Source: Chitokan C./Pexels

Full compliance is expected within a year.

Consumer Reactions to the Amendment

Many consumers are supportive of the change, appreciating the transparency it brings.

Advertisement
A large group of people sat around a table eating and drinking.

Source: Priscilla Du Preez/Unsplash

Jarrett Powers from San Jose mentioned, “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.”

Advertisement

One-Year Compliance Period

Restaurants have one year to comply with the new disclosure rules.

Advertisement
Person Holding Pastry Dishes on White Ceramic Plates

Source: Pixabay/Pexels

This period allows establishments to update their menus and meet the legal requirements, ensuring transparency for all patrons.

Advertisement

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.

Advertisement
Cooking of Tacos on a Large Pan

Source: Los Muertos Crew/Pexels

This balance aims to protect consumers while supporting businesses.

Advertisement

Potential Benefits for Workers

Some consumers believe that these surcharges benefit restaurant workers.

Advertisement
Cooked Food On Blue Plate

Source: Chitokan C./Pexels

There is an expectation that the additional charges support fair wages and better working conditions for staff.

Advertisement

Ensuring Legal Compliance

Legal compliance is crucial for restaurants to avoid penalties.

Advertisement
A lawyer is pictured at his desk

Source: Freepik

Clear communication on menus is mandated to adhere to the new law, preventing any misinterpretation by customers.

Advertisement

Broader Implications for Consumer Protection

This legislation reflects a broader trend towards consumer protection and transparency.

Advertisement
A group of men and women sat around a table eating food. There is food and wine on the table.

Alex Haney/Unsplash

By regulating how additional charges are disclosed, it aims to build trust between businesses and consumers.

Advertisement

Future Outlook

Governor Newsom’s signing of the emergency bill marks a significant shift in the state’s approach to regulating service fees.

Advertisement
Gavin Newsom standing behind a wooden lectern. The U.S. and California flags are behind him.

Source: Office of the Governor of California/Wikimedia Commons

As restaurants adapt to these changes, the emphasis remains on clear communication and transparency, ultimately benefiting both businesses and consumers.

Advertisement