California has passed a new law that will prevent restaurants and businesses from adding on service charges, resort fees, surcharges, or other additional costs. Starting on July 1, businesses will be required to include all fees in their menu prices, except for optional fees like tipping.
California Attorney General Rob Bonta stated that the goal of the law is to ensure transparency and make sure that the price customers see is the price they pay. Businesses found in violation of the new mandate may have to pay customers at least $1,000 in damages.
Advocates for customers support the new rule, believing it will allow for better comparison shopping and fair competition in the marketplace. However, some restaurant owners are concerned that higher menu prices could lead to decreased revenue and fewer hours for workers.
Despite the new rule, restaurants can still charge a higher price for delivery. However, delivery fees must now be a flat rate and not a percentage to avoid surprising customers at the end of their orders. Similar legislation has been passed in other states as part of a broader effort led by the Biden administration.
While the impact of the new rule in California remains uncertain, some worry about the potential effects on both customers and businesses in light of ongoing inflation. The lack of transparency about service fees and where they go can be frustrating for consumers and may lead to feelings of deception.
The legislation was passed by the California Senate and Assembly before being signed into law by Governor Gavin Newsom. State Sen. Bill Dodd, a co-sponsor of the legislation, believes that the new law puts consumers first and levels the playing field for businesses that advertise upfront prices.
