California Restaurants Challenge the State’s Junk Fee Ban

California’s new junk fee ban, set to take effect on July 1, 2024, may face legal challenges from the California Restaurant Association. Senate Bill 478 prohibits the advertising of goods or services without including all mandatory fees or charges. The Restaurant Association argues that this legislation shouldn’t apply to restaurant menu items, claiming they are neither goods nor services under the law.

Attorney General Rob Bonta disagrees, potentially setting the stage for a court battle. The legal dispute echoes a previous case where the Restaurant Association challenged Berkeley’s gas stove ban, highlighting their willingness to fight regulations impacting their industry.

Documents from the legislative process of SB 478 indicate a lack of clarity on its application to restaurant service fees and surcharges. Only recently did the state attorney general provide industry-specific guidance, causing concern among restaurant owners who rely on mandatory service charges to cover operational costs, such as San Francisco’s health care mandate for workers.

Eliminating these fees could force restaurants to raise prices or switch back to a tipping model, potentially lowering wages and perpetuating inequities in the tipping system. Why in the world would you fight for the right to cheat your customers? The outcome of this legal challenge could significantly impact how restaurants operate in California.

Additional Context on SB 478

Senate Bill 478, also known as the “Honest Pricing Law,” aims to protect consumers from deceptive pricing practices by ensuring that the price advertised is the final price paid. This legislation addresses the common practice of “drip pricing,” where additional fees are added during the purchase process, often disclosed in fine print or only revealed at the end of a transaction​ (Greenberg Law)​​ (CA DOJ AG)​​ (The National Law Review)​.

The bill, co-sponsored by the California Low-Income Consumer Coalition, specifically targets hidden fees in various industries, including credit card companies, resorts, car rental companies, and airlines. The law does not affect the actual price of goods or services but mandates that all mandatory fees be included in the advertised price​ (CA DOJ AG)​. In fact, GST tax should be included too.

The broader aim is to create transparency and fairness in the marketplace, allowing consumers to make informed decisions without being misled by artificially low headline prices​ (Greenberg Law)​​ (CA DOJ AG)​. Say goodbye to hidden fees and gratuity tricks—let’s make pricing straightforward and honest for everyone.


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