Californians Shocked After Newsom Changes Restaurant “Junk Fee” Ban at the Last Minute

By: Julia Mehalko | Published: Jul 08, 2024

Californians are shocked after Governor Gavin Newsom changed the restaurant “junk fee” ban that was passed last year.

This sudden change on the governor’s part comes as a surprise to many, especially as the bill was widely supported when it was introduced last year. This change by Newsom also comes at the very last minute.

Eliminating Hidden Surcharges

Last year, the California legislature got to work on finally eliminating hidden surcharges, also frequently called “junk fees”.

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A person paying with cash and receiving a receipt.

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These hidden fees are added to the bill before a customer pays. However, these customers often don’t even realize these fees are added, as they’re not stated upfront, until right when they’re paying.

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Customers Hate Junk Fees

Needless to say, many customers around California — and the entire country — have grown to hate these hidden surcharges, as they’re unaware that establishments will even add these fees until the very end.

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A close-up of a coffee mug next to many receipts and a bell on a wooden surface.

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For example, a diner at a restaurant may think they know what they’re going to spend when they eat out at a particular restaurant. However, they can quickly grow surprised when their bill increases upon paying, simply because of these hidden surcharges.

Why Establishments Use Junk Fees

Even though these hidden surcharges are despised by many customers, various establishments use them. Restaurants and hotels are two examples of places that often resort to using a hidden fee.

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According to restaurant owners, they have to use these junk fees in order to keep their overall prices down in California.

Keeping Menu Prices Low

These restaurants have claimed that adding hidden surcharges allows them to keep their menu prices low.

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A close-up of restaurant menus.

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Prices at restaurants have skyrocketed in the last few years in the nation, thanks to a prolonged period of high inflation. However, California has also seen menu prices rise alongside minimum wage increases.

Hidden Surcharge Methods

There are various ways restaurants and establishments have added junk fees to customer bills in the past few years.

A restaurant worker giving a customer a takeout bag with a receipt on it.

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Some restaurants just outright add a fee to each customer’s bill. Others only have surcharges attached to certain services. For example, some restaurants may only use hidden fees on takeout orders.

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Customers Want Junk Fees to Stop

In response to restaurant owners who have claimed that these hidden fees are to keep menu prices low, customers have responded that they would rather have higher menu prices than these secret surcharges.

A person holding a long white receipt.

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At least in this way, customers would know exactly how much they’re going to be spending at a restaurant ahead of time — rather than being surprised at the end of their meal.

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A Sudden Change on a Popular Bill

This widely popular bill — which bans specifically “hidden” fees — was passed by California last year. It has officially gone into effect on July 1.

A view of the side of the California State Capitol building seen in the daytime.

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However, many supporters of this bill were left stunned when they realized that Newsom had made a last-minute change to the law. Now, restaurants can be exempt from this ban.

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Restaurants Can Still Use Junk Fees

According to this new change in the bill, restaurants can still use hidden junk fees as they deem fit. Other establishments, meanwhile, will not be able to do the same.

A person using a machine and holding a receipt.

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So, while restaurants can use these hidden surcharges, hotels, food delivery apps, event venues, and other establishments cannot.

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A Push for Transparency

While this bill has often been called a junk fee ban, the law doesn’t actually illegalize adding fees to goods or services.

A person handing another a credit card to pay.

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Instead, the law bans the use of “hidden” fees. Therefore, any added fee or surcharge must be clearly stated to all customers in California. Customers must be well aware of these fees immediately.

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Confusion Remains

Many remain confused about this new law that has just gone into effect, especially regarding this restaurant exemption that Newsom has allowed.

Many people sitting down and eating at tables in a California restaurant.

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Some wonder if this means that restaurants can fully use hidden fees, as they have been. If this is true, then restaurants will be fully exempt from this law, and they can continue to add hidden costs to unknowing customers’ bills.

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The Fight Against Junk Fees

California isn’t the only state that has made moves to eliminate hidden fees. Many other states such as New York and Minnesota have also worked to ban these secret surcharges from various establishments.

A person holding a receipt and a wallet.

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Meanwhile, President Joe Biden has shown support for putting a national ban on these hidden junk fees. Though he has supported this policy, there has yet to be any actual national movement to get this done.

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