California Restaurants Are Upset With the State's Junk Fee Ban

You’ve probably been hearing a lot about junk fees lately. Making it easier for consumers to know what they’re actually paying for a service has been a priority of the Biden administration. State governments like those of Texas and California have also targeted different industries in the interest of getting consumers more clarity. And as those two states show, this is a bipartisan issue, which makes sense: not wanting to have extra charges tacked onto a hotel bill is something virtually everyone can agree on.

Precisely how a junk fee ban is worded and enforced can matter, however. And currently, restaurants in California are reckoning with their state’s upcoming ban on junk fees, which is set to go into effect on July 1. As Lauren Saria of Eater San Francisco explained, the state has not entirely explained to bars and restaurants how the ban will affect their businesses. That’s a problem, because initially those businesses didn’t think it would affect them at all.

As Saria writes, the state’s Attorney General plans to enforce the law when it comes to restaurants. That means that California isn’t just prohibiting add-on charges for hotel stays; it would also forbid service fees that go on bills in lieu of tips. As of Friday, the state had not yet clarified how the law would apply to restaurants and bars, which they had previously announced that it would do by May 1.

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Restaurant owner Yuka Ioroi told Eater that she was concerned about the law’s impact. ‘Our industry is having a hard time still and this is another thing that adds to uncertainty,” Ioroi said. “I feel that it’s initially probably going to affect the industry negatively.”

It’s frustrating to see the execution of this law hit so many snags. Had the state announced a clear list of what was and was not acceptable to restaurants months ago, small businesses would not be in this position. The combination of mixed messages and absent guidelines feels like the worst possible combination — and it could trip up future efforts to regulate junk fees.