Gov. Newsom Signs Bill That Will Ban Surcharges at Restaurants

Inflation is already bringing harm to the state of California along with forced increased minimum wage, but Gov. Gavin Newsom signed a bill that would ban surcharges, also known as junk fees.

While the minimum wage being increased to $20 has already wreaked havoc on restaurants in California, Gov. Gavin Newsom (D) had to make it even more difficult for them by banning “surcharges and fees,” which is what restaurant owners have relied on to provide their employees benefits and to keep up with inflation. 

Just last October, Newsom signed Senate Bill 478, which will ban “junk fees” on hotels, concert tickets, restaurants, and other places of work that have “surcharges and fees,” which will likely increase prices on customers. The law was passed by Democrats with all Republicans voting against the measure, and it is set to go into effect on July 1, 2024. 

The bill was introduced by state Sens. Bill Dodd (D-Napa) and Nancy Skinner (D-Berkeley), and it reportedly “categories junk fees as a form of ‘bait and switch advertising’ and a ‘deceptive’ business practice,” according to Skinner’s legislative page. 

Even Skinner admitted that the new law will not “necessarily make things cheaper” as “businesses are allowed to set prices as they wish, but the final total must be disclosed upfront.” Stakeholders in both the restaurant industry and the government still are not sure about how the law should be applied to restaurants, according to Eater San Francisco (Eater SF). 

The California Attorney General’s Office told Eater SF that the law will be applied to all businesses in the state, including restaurants. The issue has also been discussed in the Biden administration, which has also taken a jab at these “junk fees.” 

While the bill does not specifically address restaurants, businesses will be prohibited from “advertising, displaying, or offering a price for a good or service that does not include all mandatory fees or charges.”

“I think this was well-intended policy, nobody wants to mislead the consumer,” Laurie Thomas, executive director of the restaurant industry lobby group the Golden Gate Restaurant Association said. “But they didn’t intend this to upend the restaurant industry.”

Marcia Gagliardi, a food writer, argued that restaurant prices will increase.

“I see restaurants easily raising prices 5%, 15%. It's going to be tricky," she told CBS News Bay Area. "We're going to be seeing even higher prices based on this unfortunate interpretation.