California's attorney general has served up an unappetizing interpretation of a new California measure designed to do away with junk fees on goods and services, according to the state’s restaurant industry.
The new state law dealing with price transparency, Senate Bill 478, authored by state Sen. Bill Dodd (D-Napa), is scheduled to take effect July 1. But Attorney General Rob Bonta’s published answers to frequently asked questions about the law have drawn a rebuke from the 22,000-member California Restaurant Association (CRA).
“Beginning July 1, 2024, the ‘Honest Pricing Law’ or ‘Hidden Fees Statute,’ SB 478, 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,” Bonta’s FAQ states. “SB 478 is a price transparency bill.”
The new law will apply to most goods and services, such as event tickets, short-term rentals, hotels and restaurants, the FAQ says.
The restaurant association specifically objects to Bonta’s view that the law applies to restaurant menus and the following language: “If a restaurant charges a mandatory fee, it must be included in the displayed price. Under the law, a restaurant cannot charge an additional surcharge on top of the price listed.”
The association contends that Bonta is promoting an interpretation of the new law that the state Legislature never intended and never debated.
“The FAQ released by the California Attorney General’s Office … is a prime example of legislating through a press release,” Matthew Sutton, the association’s senior vice president of government affairs and public policy, said in a statement emailed to the Southern California Record. “CRA strenuously disagrees with the AG’s expansive interpretation of the law to outlaw restaurant service fees.”
The state’s courts have found that such service fees are allowed under California’s Consumer Legal Remedies Act, which was modified by the passage of SB 478, provided they are legally disclosed on restaurant menus, according to Sutton.
“Nothing in the plain language of the bill or legislative debate suggested an intent to change the pricing structure for every restaurant in the state,” he said.
The CRA’s law firm last week sent a letter to the Attorney General’s Office urging state officials to update the office’s interpretation of the new law’s reach.
“We request the attorney general immediately update its FAQs relating to the CLRA, and specifically section 1770, to exclude the attorney general’s unfounded opinion that the statute applies to restaurant menu items,” the letter states.
A CRA representative told the Record that Bonta’s office has yet to respond to the law firm’s objections to the FAQ.
“The FAQs exhibit a fundamental misunderstanding of the restaurant industry’s standard of transparent, up-front menu pricing, and we are considering all available options to block implementation of SB 478 in the manner suggested by the AG’s office,” Sutton said in his statement.
The state Department of Justice under Bonta has indicated that it doesn’t expect initial actions to enforce the law beginning in July to focus on existing fees paid by restaurants to their employees, such as “an automatic gratuity.”
But Bonta's office said that doesn't rule out the possibility that trial lawyers could ring up lawsuits against restaurant owners statewide.
“However, businesses may be liable in private actions,” the FAQ states.