“JUNK FEE” LAW SET TO GO INTO EFFECT JULY 1 MAY NOT APPLY TO GOLF COURSE RESTAURANT AND F/B OPERATIONS
SB 478 (Dodd; D-Napa) sailed through the legislature last year with nary a mention from SCGA Public Affairs, because it was common knowledge, or at least the “commons” thought it was common knowledge, that no aspect of a golf operation, public or private, would be affected by its passage.
The “commons” got it wrong!
First, a little background; then why we’re reporting on this today.
While passed into law last year, SB 478 was slated to become effective July 1, 2024 to allow for all affected businesses to accommodate its requirements. As for those “requirements,” the bill prohibited hidden surcharges and what it referred to as “junk fees” from being tacked onto customers’ bills, requiring that they be included in the charges posted and advertised.
We didn’t track or otherwise report on the law, because the California Attorney General’s Office in 2023 opined that were the bill to become law, restaurants could continue to apply surcharges as long as they were disclosed on the menu, with the clear implication that clear and full disclosure on banquet contracts would also permit their use for this common form of golf club/course business practice.
However, last month the Attorney General reversed course and announced that SB 478 would also apply to restaurants and related food/beverage operations. With that announcement we received calls from public golf courses and private equity clubs as to what that would mean for them. With our standard disclaimer about never issuing anything resembling a formal legal opinion, we suggested that our reading would indicate applicability in both contexts, notwithstanding the fact that the business model of a private golf club food/beverage operation has little to nothing to do with “advertising” or “posting” fees to the public; to themselves as owners of the operation perhaps, but not to the public.
Senator Dodd is now proposing that the law carve “restaurants” out of the law. Specifically, Dodd is proposing that restaurants be permitted to continue adding surcharges and mandatory gratuities/fees to bills as long as those surcharges and mandatory fees are revealed upfront, clearly, and conspicuously.
It goes without saying that the California Restaurant Association (CRA) supports the carve out; indeed, smart money would be on that organization having gone into high gear upon the Attorney General’s reversal of course last month. Unite Here Local 11, the labor union that represents numerous restaurant workers also supports the carve out, as do some but certainly not all of the state’s many consumer watchdog groups. While we shy away from making predictions, we do believe that given the circumstances, Senator Dodd’s proposed carve out has a high likelihood of coming to fruition.
We know that many California golf operations are interested in how this plays out in the coming weeks, and we will do our best to keep you informed.
