Hospitality employers in California beware. Effective July 1, 2024, California’s Junk Fee Ban (SB 478) will go into effect, making it unlawful to advertise, display or offer a price for a good or service that does not include all mandatory fees or charges.
This bill is intended to address the often perceived as bait-and-switch practice of using junk fees (aka hidden fees, surprise fees, or drip fees) to keep prices low on a website or menu, and then add a “Resort Fee” or “Service Charge” or “Surcharge” at the end of the purchase. This practice leads to a larger cost for the hotel stay, event ticket, or meal than many customers intended. The bill’s sponsors wanted to address this practice of hiding the true costs of a transaction until it’s too late, or too frustrating, for a customer to back out.
This new law won’t necessarily make things cheaper, as a business can set prices as they wish, as long as the final total is disclosed upfront. So expect your $25 burger to go up a few bucks. The bill was also sponsored by Attorney General Rob Bonta, whose office is supposed to issue guidelines for businesses at some point before the law goes into effect.
The impact on restaurants is expected to be significant as this recent Los Angeles Times article explains. Many restaurants that use a “surcharge” to offset costs of increased minimum wages throughout the state will have to change their practices.
We can expect class and PAGA actions alleging unfair business practice and false advertising claims to abound for hospitality employers that do not have their websites, menus, and other pricing publications updated by July 1st.
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