Have you ever noticed a strangely marked surcharge on your restaurant bill? In at least one state, often unexpected fees will soon be a thing of the past.
In a video posted in early May, a TikToker visiting Los Angeles from New York shared her confusion over the extra charges she found on her restaurant bill. She explained that “every restaurant we go to has a health and wellness supplement.” She then showed her bill for an unnamed restaurant that charged an additional $2.55 “Wellness Surcharge” on top of her existing bill.
Over the past few years, newspaper articles have noted the phenomenon in restaurants across the country — including in Pennsylvania, according to Philadelphia Magazine, and in Louisiana, according to PYMNTS.com. As recently as 2022, the National Restaurant Association said that 16% of restaurant owners surveyed said they have surcharges for dinners at their establishments. Furthermore, 75% of surveyed restaurant owners who already had additional fees planned to keep the policy in place for more than a year.
In particular, restaurants in LA have relied on additional service fees, such as wellness surcharges, to offset rising labor and supply costs. Fees have been a sore point for many LA residents. Last year, Reddit users created a list of restaurants across the city that added extra fees and charges in hopes of providing transparency to other consumers.
That’s about to change: On July 1st, the California Consumer Remedies Act will go into effect. The law will prohibit California businesses, including restaurants, from displaying prices that do not include fees and fees that are included in the prices.
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Common fees such as automatic gratuity, which some restaurants typically add on for larger dinners, will be prohibited under the law. Instead, restaurants will have to factor any of these additional costs into their existing menu prices.
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The California Restaurant Association opposes the bill and plans to block enforcement of the law in restaurants. In a press release, Matthew Sutton, senior vice president of government affairs + public policy for the California Restaurant Association, said “the FAQ released today by the California Attorney General’s Office is an excellent example of press release lawmaking.” The CRA strongly disagrees with the AG’s expansive interpretation of the law prohibiting restaurant service fees.”
On a larger scale, the Federal Trade Commission has also proposed a rule targeting these so-called “junk fees.” The rule is proposed in October 2023, according to the FTC’s website. A hearing on the rule was held in April.
The National Restaurant Association similarly spoke out against the FTC’s proposed ban, claiming in a press release that implementing it would “cost operators up to $3.5 billion.” The association argued, “The FTC’s proposal does not reflect the reality of the restaurant industry. It will be impractical and unaffordable for most operators.”
For now, if you’re heading to California later this summer, you won’t see any more unexpected fees if you dine out.
Categories: Trends
Source: HIS Education