San Francisco Chronicle (Sunday)
Law allowing service fees an insult to Californians
In October, California instituted a first-in-the-nation ban on hidden fees, or the now-common add-on charges that hit you when you’re buying things like concert tickets.
“The price Californians see will be the price they pay,” Attorney General Rob Bonta crowed in a statement with the authors of the bill, SB478.
Then the restaurant industry started complaining, and California lawmakers spent the next few months reversing course like contestants in a backward footrace.
On June 29, governor and former restaurateur Gavin Newsom signed a new bill into law, SB1524 — which carves out an allowance for service charges at restaurants as long as they are listed “clearly and conspicuously” on menus and ads — providing Californians with yet another reason to feel disillusioned with our government.
“With today’s signing we can uphold the principle of providing consumers with up-front price transparency without inadvertently harming food service workers or small businesses,” SB1524 author, state Sen. Bil Dodd, D-Napa, said in a press release.
Yes, what is “up-front price transparency” if not a listed menu price that you still have to mentally calculate?
You might think that any bill involving the controversial and heavily lambasted practice of adding opaque service charges to restaurant checks would meet some resistance. But it passed both state houses unanimously. Bonta, meanwhile, has said nothing.
This silence is deafening, given that a recent Chronicle poll showed 81% of respondents are supportive of banning restaurant service fees. The public can and should feel insulted by the fact that lawmakers think they deserve to be led to believe the cost of goods is lower than it is.
“This is what makes consumers cynical,” said Robert Herrell, executive director of
the Consumer Federation of California, the only organization to go on record in opposition to SB1524. “It’s just the latest in all these little ways in which people just feel like the system doesn’t work for them.”
Part of what’s frustrating is that, no matter how positively lawmakers like Dodd try to spin this, the pro-social reasoning behind SB1524 — that it will help workers, provide price transparency and keep restaurants in business — doesn’t make a ton of sense.
Far more telling than the nonsensical platitudes of our electeds is a look at which organizations support the bill and which don’t.
The California Restaurant Association is all for it. The powerful and wealthy lobbying group and an affiliate of the National Restaurant Association has consistently opposed worker protections and health care legislation and has fought to depress wages. The
top contributors to the California Restaurant Association’s political action committee include Disney and In-andOut Burger, and a 2021 watchdog report found that the national entity has contributed $5.5 million to industry-friendly federal political candidates since 2007.
If Newsom wants the White House, he’ll need some of that cash.
The other organizational sponsor is Unite Here, a union that largely represents the types of workers who work banquets, catering, airport facilities and other institutional food vending — not what most people think of as “restaurants.” Unite Here’s participation provides the pro-labor cover for lawmakers to claim that SB1524 will be good for “restaurant workers.” This particular union, however, has secured defined benefits and wage increases tied to service charges for its members.
That doesn’t apply to all
hospitality unions, let alone nonunionized restaurant workers.
Jennifer Alejo, executive director at Trabajadores Unidos Workers United, a restaurant worker union in San Francisco, rejected the idea that a junk fee ban for restaurants would hurt workers. There’s still no guarantee that these fees help them, anyway.
René Panti, a Trabajadores Unidos Workers United member, washes dishes at the Battery, a private club with several dining areas in San Francisco. The Battery has a 20% service charge for its restaurants; despite this, Panti said wages and benefits haven’t increased in three years.
“The customers are slowly paying more in fees but we as workers don’t receive this,” Panti said.
Furthermore, instead of helping workers, fees pit customers and workers against each other.
Consumer advocate Herrell noted that service charges confuse and frustrate diners who may end up leaving smaller tips or avoiding the restaurant altogether. Just because a restaurant considers the tip separate from a service charge, that doesn’t mean customers will. Instead, many will (rightfully) consider the two payments in competition for their limited generosity. When that happens it’s the tip, the allegedly optional charge, that’s going to take the hit.
Lawmakers who are worlds away from understanding the economics of the service industry seem to have no consideration of this at all.
So, what does this all mean for the future of restaurants?
Disgruntled diners have compiled a crowd-sourced list of more than 600 California restaurants that have service fees. Each is listed with its service charge percentage, demonstrating just how arbitrary and unregulated this system is: from 30% at the Black Cat Jazz Supper Club in San Francisco to 4% at Mill Valley’s Buckeye Roadhouse.
What are these fees paying for? Notably, SB1524 doesn’t mandate that restaurants be truthful or accurate in their disclosures — just “clear and conspicuous” — so who knows?
“Being honest isn’t very lucrative,” said Herrell, who said his push to include “accurate” in SB478 ruffled lobbyists’ feathers at a recent hearing.
I don’t want to make SB1524 a bigger deal than it is. Service fees have been normalized in California for some time. It’s what this law symbolizes that really matters.
It’s clear our government doesn’t think we’re smart enough to make our own informed decisions.
If they’re this disillusioned, why wouldn’t the rest of us be?