California Governor’s Surprise Move: Restaurants Get a Pass on ‘Junk Fee’ Ban

A widely supported bill passed last year in California aimed to eliminate hidden surcharges in restaurants, but the governor has changed his mind about the legislation.

“Junk Fee” Ban Passed Last Year

Restaurant customers rejoiced last year when California announced a ban on “junk fees,” or hidden surcharges that are often added to the bill but not stated upfront. 

What Are Junk Fees?

Many restaurant owners defended the use of surcharges, saying that they helped to keep menu prices down and cover rising expenses associated with inflation and minimum wage increases.

Why Junk Fees Are Used

Restaurant owners who use so-called “junk fees” say they do it to help make up the difference in expenses for supplies that have seen significant price hikes. 

The Hidden Cost of Takeout

Some choose to only charge the extra fee for takeout orders to cover the cost of extra items associated with them, such as condiments and cutlery.

Junk Fees vs Higher Menu Prices

But opponents of these fees say they would rather pay higher menu prices if it meant more transparency on the total cost of eating out. 

Last-Minute Change Causes Confusion

Californians who celebrated the bill when it was first introduced are now left disappointed and confused at the last-minute change of heart by Governor Newsom. 

Bill Effective as of July 1

The bill still went into effect on July 1st, and while most businesses are still impacted by it, Newsom’s update provided an exemption to restaurants, allowing them to continue implementing surcharges as they see fit.

Newsom’s Rise to Fame

The California Democrat has been on the national stage during this election cycle, with many party members wondering if he would make an official bid for the presidency. 

Did Newsom Run a Shadow Campaign?

Newsom has been accused of running a “shadow campaign,” but he maintains that he fully supports President Biden’s re-election campaign.

Split Approval Ratings

Newsom continues to be a polarizing figure in his state. As of earlier this year, California residents were split down the middle — about half approve of their governor while the other half are critical of his performance.

California’s Minimum Wage Increase

Feathers were ruffled across the state earlier this year when Newsom approved a minimum wage increase for fast food workers, increasing their hourly pay from $16 to $20. The federal minimum wage remains at $7.25 per hour, where it has been since 2009.

Impacted Business Owners

Restaurant owners were particularly upset by the minimum wage hike. Some were forced to shutter completely as a result, claiming they could not afford the increased labor costs. Others significantly reduced their staff or raised menu prices to make up the difference.

Restaurant Owners vs Customers

The same demographic is praising Newsom for exempting restaurants from the junk fee ban because of their usefulness is covering expenses. But customers are frustrated with the change, saying that they were looking forward to more transparency.

Industries Impacted by Junk Fee Ban

The bill requires that companies like hotels, event venues, food delivery apps, and more must be clear about any additional fees that will be charged to customers before they make their purchase. 

Biden’s War on Hidden Fees

President Biden has shown support for a national ban on junk fees. He has taken steps to address the issue at the federal level, but so far, no such laws have gone into effect. 

States for Transparent Pricing

Other states, however, like Minnesota, New York, and Connecticut, have either banned the surcharges or are in the process of doing so.

Fees Allowed with Transparency

Proponents of the bill want businesses to understand that the new law does not require any changes to how a business manages their pricing. Rather, it simply requires that all fees and surcharges are disclosed at the time of purchase. 

The Restaurant Exemption

That clarification has led to confusion for some consumers about why restaurants are exempt, since it doesn’t require that they stop charging fees — just that they’re up front about it. 

Customers Want Answers

As a result, California restaurant customers are looking for answers about whether restaurants have been given carte blanche to tack hidden fees on to their bills.

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Featured Image Credit: Shutterstock / Sheila Fitzgerald.

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