Calif restaurant surcharges to stay after last-minute reversal by Newsom

The law designed to eliminate hidden fees was planned to go into effect on July 1

NBC Universal, Inc.

Turns out, surcharges are staying in California restaurants.

Late Saturday night, California Gov. Gavin Newsom signed emergency legislation that exempts restaurants from a new law set to take effect on July 1. The legislation, passed in 2023, was aimed at eliminating so-called "junk fees."

The latest legislation signed by the governor means restaurants are able to keep surcharges in place.

"We like to treat ourselves, not every night, but we like to go out quite a bit," said Paul Cortez, a San Diego local who has lived in downtown for the better part of three decades.

Cortez goes out to dinner with his wife frequently, and has experienced his fair share of "hidden fees" whenever the bill comes.

"I would like to have some honesty, just say what the price is on your menu and let me decide whether or not I'm going to pay it," said Cortez.

In a statement, California State Sen. Bill Dodd said: "The bill ensures transparency in pricing for the customer before they make their decision to order and supports the workers because many restaurants have switched to service-charge models that enable more equitable pay for staff and help finance more benefits."

The California Restaurant Association (CRA) tried to fight this law when it was first signed. The association argued it should not apply to restaurants because menu items are not "goods" or "services" as defined in California's civil code.

The latest piece of legislation means that in short, hidden fees are sticking around. NBC 7 reached out to a few restaurants around San Diego to ask about their plans now that this legislation is in place. Baja Betty's along University Avenue in Hillcrest never introduced surcharges, but does include gratuity on parties of six or more people.

A manager of Baja Betty's said they had two different versions of the menus prepared, depending on how this new law plays out, and still have to decide whether they're going to keep the old menu, or switch it out with an updated version. Other restaurants told NBC 7 that they're in a "wait and see" approach, depending on customers' reaction.

California law allows restaurants to charge fees but must disclose them, reports NBC 7 and Telemundo 20's Sergio Flores.
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