By Jason Walsh, NORTH BAY BIZ
https://www.northbaybiz.com/2024/07/02/legislature-walks-back-honest-pricing-law-for-restaurants
We’ve all been there: When that $12 burger shows up on the receipt as a surprising $25 splurge after several hidden fees are tallied by the restaurant at the end of the meal.
Well, that will all end this month, when Senate Bill 478 goes into effect, barring businesses of all types from adding undisclosed fees at the end of transactions—ensuring customers are aware of the full price of an item or service at point of order. The bill was co-sponsored last year by 3rdDistrict state Sen. Bill Dodd, who represents portions of Sonoma and Napa counties.
As state Attorney General Rob Bonta clarified in May, SB 478—aka the Honest Pricing Law—“makes it illegal for businesses to advertise or list a price for a good or service that does not include all required fees or charges” other than certain government taxes and shipping costs.
Added Bonta: The law is about “clear and honest communication with consumers” and “the law is simple: the price you see is the price you pay.”
However, that level of transparency didn’t sit too well with the restaurant industry, which argued restaurant owners depend on separating those fees from menu pricing to avoid the appearance of a several-dollars uptick on the cost of a Caesar salad—even though the full cost will still be paid by the customer when the bill is later tallied.
In a concession to the restaurant lobby, Dodd this month introduced SB 1524, clarifying that any mandatory gratuity, service charge or other fee levied by restaurants doesn’t have to be reflected in the price of menu items—such as drinks, starters, entrees and desserts—but instead must be “displayed conspicuously on restaurant menus,” Dodd’s office wrote in an announcement. The bill doesn’t specify how conspicuous or where on the menu the charges must be displayed.
While Dodd’s office says the extra fees would be cited on menus, the text of SB 1524 states that any mandatory restaurant fees must be “clearly and conspicuously displayed on the advertisement, menu, or other display,” raising questions about whether the fees have to be displayed on menus, or can instead be displayed elsewhere. Still, Dodd’s office stresses that “If a restaurant is charging a mandatory fee they must disclose that fee on their menu.”
Despite the attorney general’s previous insistence that restaurant mandatory fees would be reflected in “the price you see,” Dodd’s office says SB 1524’s allowance for restaurant fees to be cited elsewhere was always inherent in SB 478 and the new bill was only introduced to clarify that.
The difference between the extra fees being baked into the advertised price or being listed elsewhere on the menu is largely about how the full price of a meal is communicated to the customer. A restaurant, for instance, may want to charge an additional 15% to customers in order to ease its payroll burden after the state minimum wage increased. In Bonta’s description of the new law, a $10 slice of pie at a restaurant that charges an additional 15% “cost of living” fee for staff wages would now be priced as $11.50 for the slice of pie. SB 1524, however, would allow the restaurant to keep the pie priced at $10, while requiring that somewhere on its menu is noted the customer will also be charged a 15% wage fee. In both situations, the customer is paying $11.50 for the pie; the difference is in how effectively the full price of the order is communicated.
SB 1524 was introduced as an urgency measure, in hopes it would be adopted by the state legislature in time to coincide with the July 1 effective date of SB 478. The bill is co-sponsored by Dodd, Sen. Scott Wiener, D-San Francisco, and Assemblymember Jesse Gabriel, D-Encino.
The California Restaurant Association said it “strongly supports” SB 1524, as it would continue to allow restaurants “to impose service charges, mandatory gratuities, and other common menu charges,” provided the charges are disclosed in advance.
Consumer advocates, however, said that while SB 1524 may be better than no transparency at all, it still reeks of an effort to camouflage the true cost of food orders.
As Carmen Balber, executive director of Consumer Watchdog, told the LA Times: “You’re expecting consumers to do a lot of complicated math on each menu item.”