SACRAMENTO, Calif. — A lot of diners are angry and confused about certain fees showing up on their restaurant receipts. Many say they’re surprised at the extra dollars tacked onto the bill that aren’t food, tax or tip.
“I noticed a charge on my receipt that was quite surprising, something I had never seen before,” said customer Dani Dean.
Dean, a busy mom in Auburn, recently took her kids out for a pizza dinner.
“I was in such a rush that I kind of just grabbed my food, paid and left and I didn't notice my receipt until after I had left the restaurant,” said Dean.
It was when she noticed a $4.03 charge labeled ‘California Employer Mandates.’
Not knowing what the fee was, she went to social media to see if other people experienced it too and it turns out she wasn’t alone.
Someone commented on her post saying, “I’ve noticed this trend the last few years of separating fees from the menu price.”
Another person asked, “How it that even legal if they don’t tell you about the fee before you order?”
“Restaurants are trying to find a way to … raise prices sometimes without visibly raising prices,” said Derek Stimel, UC Davis Associate Professor of Teaching Economics.
And they can do so through service charges like the one Dean experienced. Experts say the charges can be legal in California and aren’t new. They’ve been around for a few years in big cities like Los Angeles, San Francisco and Sacramento.
“The fact that it’s sort of spreading I think is in a way indicative of this pressure of inflation hitting not just big cities, but also suburbs and smaller towns,” said Stimel.
ABC10 asked a Sacramento-based hospitality lawyer about the fee. He says, if implemented correctly, service charges can be a mandatory part of the bill and not something a customer should or could refuse to pay.
“As California’s legislature has continued to burden employers with more and more costs (higher minimum wages, costs associated with mandatory training or paying for food handler cards) restaurants have struggled financially,” said Alden Parker, the co-chair of the Hospitality Industry Group, Fisher & Phillips LLP.
But if restaurants push guests too far, they could risk losing them. For customers like Dean, the lack of transparency is what’s frustrating.
“I think that's the thing I don't like the most. I should be aware of what it is and I should have the option whether I want to proceed with that purchase or not,” she said.
ABC10 reached out to the Small Business Administration and the California Restaurant Association. Both declined to comment.
Currently, restaurants aren’t required to put up notices about the service charges, but there’s been some litigation over service charges not listed on the menu.
Starting July 1, a new law will allow service charges but they have to be incorporated into the menu prices.
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