Walters: California restaurants now want an exemption from the state’s new hidden fees law

In “1984,” George Orwell’s novel about a dystopian future, he describes “newspeak,” a propagandistic language of euphemisms and inversions used by officialdom to mask the reality of their meaning.

We got a dose of California-style newspeak last week when state Sen. Bill Dodd, a Napa Democrat, introduced Senate Bill 1524. It would exempt restaurants from his previous legislation, SB 478, which requires businesses to fully include extra fees in their prices, rather than tacking them on after services or goods have been delivered.

Dodd declared his proposed new legislation would “enhance consumer protection” for restaurant patrons by “clarifying state law” on how fees and other service charges should be disclosed.

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“Restaurant customers shouldn’t be surprised when they get their checks by a slew of extra charges they were not expecting,” Dodd said. “Many restaurants are up-front with their business practices but too many aren’t, necessitating action.”

In fact, Dodd’s original legislation, passed last year and due to take effect on July 1, was aimed at eliminating “a slew of extra charges” on restaurant bills and other consumer transactions. But SB 1524 would reduce consumer protection by allowing restaurants to avoid full disclosure of their prices by burying the notices of extra fees within their menus, where customers are least likely to notice them.

The deceptive descriptions of Dodd’s new legislation accompany assertions by bill sponsors in the restaurant industry and their unions that if surcharges are included in food prices, they would somehow lead to pay reductions.

“Cutting the pay of banquet servers and ballpark workers was never the intention of SB 478, as the bill’s authors have made clear,” said Mario Yedidia, western political director for UNITE HERE, a union that represents some food service workers.

“This will enable restaurants to continue to support increased pay equity and to make contributions to worker health care and other employee benefits,” added Matthew Sutton, senior vice president of the California Restaurant Association.

There is absolutely nothing in the current law that prevents restaurants from raising their prices as much as they desire to increase their workers’ pay and benefits. That’s simply business as usual throughout the economy.

Nor is requiring restaurants and other businesses to list their full prices before consumers decide whether to make transactions such a novel idea.

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Walters: California restaurants shouldn’t be shocked law banning ‘junk fees’ applies to them

Last Friday, a friend and I met at a chain restaurant in Sacramento for our customary weekly lunch. Both of us ordered $16 plates of Mexican food.

When the bill came, it totaled a bit over $36, including taxes and a $1.28 “surcharge.” We gave the server $45 before leaving, assuming that the extra cash would cover her tip.

I mention the somewhat mysterious surcharge because, just a few days earlier, California Attorney General Rob Bonta’s office declared that a new state law outlawing extraneous fees attached to bills for services or goods also includes restaurants.

“SB 478 applies to restaurants, just like it applies to businesses across California,” a Department of Justice spokesperson told the San Francisco Chronicle. “The law is about making sure consumers know what they are going to pay and requires that the posted price include the full amount that a consumer must pay for that good or service.”

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It was something of a shock to restaurateurs because when the bill was making its way through the Legislature last year, they inferred from the discussions that restaurants would be exempt. That assumption meant that restaurants were not among the business groups opposing the measure.

The Chronicle’s reporting generated a sharp reaction from restaurant operators, many of whom have added fees to their bills to cover rising costs, particularly for wages, without raising their basic menu prices.

“It feels like the state lit the fuse to this bomb and is standing back to see what happens,” Tim Stannard of Bacchus Management Group, which operates multiple Bay Area restaurants, told the newspaper. “It is terrifying. We can’t pay the wages we’re paying now unless we dramatically increase prices and hope guests actually come in and pay those prices.”

On Monday, the Employment Policy Institute, a national organization that tracks minimum wages and other employment issues from a business standpoint, denounced Bonta’s declaration, saying it would exacerbate a decline already evident in California’s restaurant industry.

“Service charges have been increasingly common tools aimed at keeping restaurants afloat and able to pay the higher minimum wages, amid rapidly rising state and local minimum wage requirements,” the organization said in a statement. “Since the state began annual wage hikes up to $16.50 per hour starting in 2017, and localities raised wages even higher, California restaurants have suffered significant losses. Now this tool will be taken away from restaurants, causing further damage to the industry and its employees.”

Bonta and a coalition of consumer groups sponsored SB 478 after President Joe Biden vowed to eliminate what he calls “junk fees” that have proliferated in multiple industries. Two Democratic senators, Nancy Skinner of Oakland and Bill Dodd of Napa, carried the measure, which gained final approval last September and will take effect on July 1.

“Bait-and-switch advertising to hide fees is a significant problem facing consumers that appears to be proliferating in more and more sectors of the economy” the bill authors said while it was pending. “Hiding required fees is nothing more than a deceptive way of hiding the true price of a good or service.”

Click here to read the full article in CalMatters