Newsom’s Last Minute Changes to Restaurant “Junk Fee” Ban Shocks Californians

This sudden change on the governor’s part comes as a surprise to many, especially as the bill was widely supported when it was introduced last year. This change by Newsom also comes at the very last minute.

These hidden fees are added to the bill before a customer pays. However, these customers often don’t even realize these fees are added, as they’re not stated upfront, until right when they’re paying.

For example, a diner at a restaurant may think they know what they’re going to spend when they eat out at a particular restaurant. However, they can quickly grow surprised when their bill increases upon paying, simply because of these hidden surcharges.

According to restaurant owners, they have to use these junk fees in order to keep their overall prices down in California.

Prices at restaurants have skyrocketed in the last few years in the nation, thanks to a prolonged period of high inflation. However, California has also seen menu prices rise alongside minimum wage increases.

Some restaurants just outright add a fee to each customer’s bill. Others only have surcharges attached to certain services. For example, some restaurants may only use hidden fees on takeout orders.

At least in this way, customers would know exactly how much they’re going to be spending at a restaurant ahead of time — rather than being surprised at the end of their meal.

However, many supporters of this bill were left stunned when they realized that Newsom had made a last-minute change to the law. Now, restaurants can be exempt from this ban.

So, while restaurants can use these hidden surcharges, hotels, food delivery apps, event venues, and other establishments cannot.

Instead, the law bans the use of “hidden” fees. Therefore, any added fee or surcharge must be clearly stated to all customers in California. Customers must be well aware of these fees immediately.

Some wonder if this means that restaurants can fully use hidden fees, as they have been. If this is true, then restaurants will be fully exempt from this law, and they can continue to add hidden costs to unknowing customers’ bills.

Meanwhile, President Joe Biden has shown support for putting a national ban on these hidden junk fees. Though he has supported this policy, there has yet to be any actual national movement to get this done.

A FinanceBuzz Analysis in May found that fast-food menu prices have increased by double the rate of US inflation since 2014.

A Vericast Restaurant report in May found that 67% of survey respondents think that the cost of dining is too expensive.

Restaurant prices are rising by over 5% annually, which is much higher than grocery prices at 1.2%.

“The steadily increasing cost of dining out is testing the limits of what consumers can and will spend,” said Baggett. “There’s a noticeable decrease in consumers dining out, especially with consumers that have a household income under $75,000.”

A recent minimum wage increase to $20 for fast-food workers caused menu prices to rise by as much as 8% according to a Kalinowski Equity Research report that compared the prices of 25 restaurants.

Newsom’s restaurant is also reportedly exempt from the new state law that requires $20 per hour for fast-food workers.

“Here is a simple question for Republicans: If California is a failed state, why are four of the seven most valuable companies in the world based here?” Newsom said during his State of the State speech.

While inflation levels for much of the country have gone down in recent years, CalMatters reported in March that California’s inflation remains higher than before the pandemic began.

In Los Angeles, prices rose by 4% year over year, which affects what customers pay for things like food, rent, and car payments.

“The California State Senate just unanimously gutted its ban on hidden junk fees for restaurants, fast food chains, grocery stores, grocery delivery services, caterers, bars, and food concessions. This is a horribly unpopular move, with 83% of Californians in opposition,” said X user Lee Hepner.

“One of the first laws they made here that I’ve liked and they immediately reverse it :/. Restaurants should stop trying to manipulate the customer, include it in the price,” said an X user.

“I’m really torn about this new bill. On one hand, I get that some restaurants are struggling to make ends meet with the current state of the junk fee ban. But on the other hand, I don’t want to see a reversal of progress made towards reducing waste and promoting sustainability,” said one X user.