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California Law Banning Restaurant Hidden Charges Set to Go Into Effect in July

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California Law Banning Restaurant Hidden Charges Set to Go Into Effect in July
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A picture of a waiter passing menu to customer
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California Law Banning Restaurant Hidden Charges Set to Go Into Effect in July

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As stated by California’s attorney general, a new law will ban hidden fees and extra charges on restaurant bills and other industries by July 1, 2024. 
This is to say that in California restaurants, no extra fees or charges will be hidden. The attorney made it clear that those additional charges on restaurant bills are illegal and against the law, and customers should pay exactly for what they purchase. 

About The New Law

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The California Senate passed the new law in September 2023. It is called “SB478” and can also be called the “Consumers Legal Remedies Act.”
This law is enacted to prevent some businesses like restaurants or some rental companies from misleading their customers with their advertisements and price offering practices without including all that they have to pay upfront. 

Awareness of What Customers Have To Pay for Before and After Purchasing

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According to a representative of the Department of Justice, an explanation was made to inform the public about the law and how it can be helpful to customers. 
The spokesperson explained that the SB478 law would apply to restaurants and some businesses in California. The law ensures that customers are fully aware of what they will purchase and pay for. 

No More Unnecessary Fees

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Initially, these companies are fond of practices whereby a customer will be a bit overcharged for their actual purchase. This new law wants to make sure customers get the actual price for the purchase of their goods and services without any additional fees.
As authored by Democrat Senators Nancy Skinner and Bill Dodd. These companies will no longer be able to trick customers into paying for what they did not expect at the end of each transaction.

Senator Nancy Skinner Speaks on Behalf of Californians

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Senator Nancy Skinner expressed the frustration faced by Californians. In a press release sometime in February 2024, the senator speaks of how legislation plans to bring about the actual cost of goods and services to the state. 
Skinner explained how Californians have to pay unnecessary fees whenever they purchase the products they need. These fees prevent people from having whatever fun activities they might be craving because they’ve been overcharged for something they’re not initially aware of.

Perspective From Those Who Oppose The New Law

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Some restaurants and business leaders felt the new law would unnecessarily negatively impact businesses. They expressed concerns about possible increments in product purchases, which would, in turn, make customers feel they are paying too much. 
Recently, the minimum wage for restaurant workers was raised to $20. This was listed as one of the reasons for the extra fees customers have to pay at the end of any transaction.

California Restaurants Association Opposes Attorney General’s Explanation

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The California Attorney General opines that the new law will enable restaurants to see extra charges on products as illegal. However, the California Restaurant Association tackles his opinion. 
The President of the California Restaurants Association, Jot Condie, explained that the legislation did not expand the current law and also accused the Attorney General of having an ulterior motive for the law beyond what the legislators initially proposed. 

Possibility of Price Hikes at Restaurants

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There is speculation about what will likely happen with the new law enacted. Some feel the prices of products will reduce, some think it will remain the same and some think things will be more expensive than they used to be. 
A food expert explains what is likely to happen in the long run. Marcia Gagliardi told CBS News that there is a high chance that things will be more expensive because these restaurants would like to maintain their profit gain and also meet the wages of their employees, which they recently raised to $20 per hour. 

Gagliardi Gives Further Explanation on Possible Price Hikes

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Gagliardi explained that the new law will undoubtedly make things more expensive. Those extra fees they charge on every purchase are part of their gains, and they help them run their businesses. 
Gagliardi stated that restaurant products will likely increase sales by 5 to 15%. Prices will be higher, and customers will ultimately have no choice but to pay for them. 

What Is Service Fees and Its Impact

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Service fees are those fees attached to a particular service. These service fees are also what customers complain about and are called hidden or unnecessary fees. These service fees also add value and impact to businesses. 
Gagliardi explains that the service fees are used to create an equitable model for employees. These fees help ensure workers get fair wages. Not all restaurant workers make the same amount of money; hence, service fees help compensate those who earn lower wages. 

Elimination of Service Fees Can Benefit Smaller Restaurants

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According to a food tour leader who is based in San Francisco, he explained that the beneficiaries of the elimination of service fees will be those who run a kind of family-owned restaurants. 
Medin states that they’ll have fewer worries about employees because they usually don’t have many. Medin advises that their focus should be establishing a welcoming environment and building a solid customer relationship. He said that by doing this, they tend to gain more customers and worry less about service fees. 

Concerns About Potential Conflicts Between Tipped and Non-Tipped Workers

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The new law will prohibit service fees, which help support the employee’s wages. The Director of the Golden Gate Restaurant Association, Laurie Thomas, raises the question of whether there’ll be a decrease in the wages of servers. 
Thomas further ponders if there will be possible conflicts between tipped and non-tipped workers. He said workers will likely want to switch to the traditional tipping model, a situation whereby workers will ask to be tipped by customers who wish to do so. 

Will Restaurants Retain the Salaries of Their Workers or Increase the Price of Their Products?

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There is speculation about using service fees to ensure reasonable wages for employees. This raises the question of whether the restaurant will want to increase the price of its products or reduce the wages of its employees. 
As it stands, there is no guaranteed news about what the restaurant plans to do. However, some food experts like Marcia Gagliardi predicted a possible increase in the prices of restaurant products as they would likely not want to reduce the wages they recently raised suddenly.