Restaurants and bars can continue to charge service charges, if posted.

The 3, 5 and 20% fees at the bottom of the menu may still exist. With little time to spare, a new law will allow restaurants and bars to continue charging service fees, health care costs and other additional fees when they are clearly listed for diners to see. The practice was scheduled to be banned on July 1.

on saturday, Governor Gavin Newsom has signed Senate Bill 1524, an emergency measure that would exempt California food and beverage vendors from Senate Bill 478: An Act Which goes into effect at the beginning of the month and targets ticket sellers, hotel and travel sites and other companies that charge “hidden” or “unsolicited” fees. Before that SB 1524 introduced in early JuneRestaurants and bars were listed among the affected businesses, with Atty. General Rob Bonta advises restaurants and bars to include surcharges in menu prices to avoid potential legal action.

“These deceptive fees prevent us from knowing how much we will be charged in the first place,” said Lt. Gen. Rob Bonta, who co-sponsored SB 478, in a statement the day it was signed. Bonta could not be reached for comment on SB 1524.

Many service industry operators have been vocal against SB 478 since its passage in October, fearing it would raise menu prices during… A turbulent year marked by closures and inflation It will only lead to more loss of customers and support. Several restaurant owners told the Los Angeles Times that reviewing or completely overhauling the tipping and surcharge system could result in the loss of employee benefits or outright closure. The passage of SB 1524 and the continuation of these surcharges could affect tens of thousands of restaurants across the state.

Read more: The shocking state of the restaurant industry: “We can’t afford to open restaurants. We can’t afford to close restaurants.”

“We are the most regulated of any business, and we are struggling to survive under the broken system that has been handed to us over many decades,” said Eddie Navarette, co-founder of the restaurant advocacy group Independent Hospitality Coalition. “When you add more regulations, whatever they may be, it makes things harder. It’s already hard … There’s been a mass exodus of our small restaurant community. I think it’s a huge relief that there’s one less thing being thrown at them now.”

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Navarrete has spent weeks campaigning for Senate Bill 1524, writing letters, meeting with more than 35 political consultants, lawmakers or their representatives, knocking on doors at the state Capitol, and explaining the use of service charges within the tip-based restaurant industry, which operates uniquely from most other industries that would be affected by Senate Bill 478.

Surcharges, health care fees, and service charges are regularly used within the industry to stabilize wages in dining rooms and kitchens—where servers often receive tips but cooks and dishwashers do not—and to help offset the cost of benefits such as health care. Companies that charge a higher service charge, such as 18% or 20%, often note that they are not expected to tip.

“It’s puzzling that restaurants are saying they need to do things differently, because it sounds like they need to hide the cost of their food from us and that doesn’t seem right,” said Jane Engstrom, director of the California chapter of the Public Interest Research Group (CALPIRG), a nonprofit that advocates for and protects consumers. “It feels like you’re being scammed, that’s what it feels like: They’re trying to trick you.”

Read more: Restaurants may be able to keep the service charge if the menu shows the charge.

Some local restaurants have it Criticisms Accused of abusing service charges or other surcharges, though several chefs and restaurateurs told the Los Angeles Times that such “bad actors” are few and far between.

“Every restaurateur I know who cares about this industry is using it in a very appropriate, responsible, forward-looking way that if it were to disappear, it would be really crippling for everyone,” Ryan Bailey, owner of Kato, told The Times earlier this year.

The new bill, which passed unanimously through the General Assembly and Senate in late June, was authored by Sen. Bill Dodd (D-Napa) — who also co-authored Senate Bill 478 — as well as Sen. Scott Wiener (D-San Francisco) and Assembly members Matt Haney (D-San Francisco), Jesse Gabriel (D-Encino) and Cecilia Aguiar Curry (D-Winters).

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This campaign is supported by the California Restaurant Association and Unite Here, both of which represent thousands of hospitality workers in California.

“this [SB 1524] “These changes will enable restaurants to continue to support increased pay equity and contribute to worker health and other employee benefits,” Matthew Sutton of the California Restaurant Association said in a public statement. “Most importantly, consumers will still be able to make informed choices about where they choose to eat out.”

While some restaurant owners and bar operators are breathing a sigh of relief about the continuation of the service charge, others are frustrated by the government’s quick change.

Exterior view of L&E Oyster Bar at night

In April, ahead of SB 478’s July 1 deadline, L&E Oyster Bar and sister restaurant El Condor incorporated the 4% service charge into their menu prices. (Ricardo Diaratanha / Los Angeles Times)

As directed by the Attorney General on Senate Bill 478, in April, restaurant owner Dustin Lancaster An additional 4% charge has been added to the menu price for food For two of his Los Angeles restaurants, L&E Oyster Bar and El Condor, he said that in light of SB 1524, he won’t be returning to a service charge model, at least for the foreseeable future, and that “it’s not as easy as just unbaking the cake.”

“It’s unfortunate that this is all too familiar to restaurants in California,” Lancaster told the Los Angeles Times this week. “Just like with Covid, they’re tricking us into changing our model over and over again as if it’s no big deal for small businesses. Restaurants continue to close.” [at] “This alarming rate in Los Angeles, and this kind of unnecessary shift, is why California remains the least small business-friendly state in America.”

At Michelin-starred restaurant Bell’s in Los Alamos, ownership has tracked the progress of the two Senate bills and waited for final word before deciding whether to remove the 20% service charge, which benefits all non-management employees. Prior to the passage of SB 1524, bell fees were already listed on the lunch and dinner menus, the website on the Frequently Asked Questions page, and on the home page regarding takeout orders; The new law will allow the restaurant to continue its practices without reshaping its business model.

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Greg Ryan, owner of Bells, He told the Times That he listens and understands customers, regulators, and his team, and that he wants to do what is best for his employees.

For months, this practice was a balancing act.

As Senate Bill 1524 passed through the California General Assembly and Senate, the outcry on social media and in public forums like Reddit was swift and vocal, with many anonymous commenters commenting that they would start leaving 0% tips in response to the exemption. Another Reddit user created Spreadsheet Which tracks surcharges and service charges at restaurants across the state.

Read more: “Do you think tipping culture is out of control?” Inside our evolving tipping dilemma

One Los Angeles restaurant owner, who asked not to be identified for fear of customer retaliation, told the Times that they had noticed an increase in $1, 0% or other low tips over the course of the month, possibly due to the 3-4% service charge imposed at the restaurant.

“I’m not happy with the bill,” said Gene Engstrom of Calberg. “I think it would be better for restaurants and bars to also have clear, up-front prices, so that consumers can do easy comparing and contrasting. When I decide to go out to a restaurant with my family, I check the prices first, on the menu, online.

She said SB 1524 requires clear posting that is a benefit, but not as strong as SB 478 with its initial guidance from the Attorney General calling for service fees to be included in list prices. Engstrom called SB 478 “a great model bill” and would like to see similar consumer protection legislation in other states, or at the federal level — without as many exceptions for industries, regardless of how service fees impact their business plans.

“I think so [SB 1524] “It’s unfortunately a step back, but it’s still transparent. You can still see it, you just have to do the math,” she added.

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This story originally appeared in Los Angeles Times.

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