California says restaurants must bake all of their add-on fees into menu prices | Hacker News Reader

California says restaurants must bake all of their add-on fees into menu prices

npr.org

96 pointsmemset196 comments

This bit is amazing:

> Restaurant owners like Laurie Thomas, who heads the Golden Gate Restaurant Association, say the changes will bring higher prices and sticker shock

So these restaurant owners think they’re avoiding sticker shock by making the stickers lie?

They are hoping to delay the sticker shock until the customer has crossed the rubicon. It’s highly unethical.

Also extremely annoying as a customer from a different culture.

I've learned to always ask "what's the final price I will have to pay for this item?" everywhere I go in the USA. Restaurants, bars, shops, even the places I assume I will pay the sticker price I will ask that question to avoid any surprises.

We do this to make up for all the money American tourists leave on restaurant tables in the EU.

It's crazy that California is doing this at all. And it's crazy they "fix" this same bug over and over for different types of businesses. Is this just so politicians can be seen doing something?

This should be covered very clearly by the existing federal laws against fraud. Because that's what this is. If you say "10 dollars" and then after they say "11 dollars" when it's time to pay, that's just fraud.

I mean it clearly isn’t covered under current definitions of fraud so lawmakers need to act on them.

If there’s one thing the U.S. is good at it’s suing people and organizations. If this was such a clear case of fraud there’d be a phalanx of lawyers making millions suing the tens of thousands of restaurants in the country.

They're not acting on it though. They're fake-acting on it.

>This should be covered very clearly by the existing federal laws against fraud. Because that's what this is. If you say "10 dollars" and then after they say "11 dollars" when it's time to pay, that's just fraud.

Except it's not as straightforward as this. There's usually some fine print at the bottom that says there's a 20% service charge, taxes not included, or whatever.

Also fraud.

You might think it's fraud, but that's irrelevant unless you're also able to convince a judge. What's the precedence on this sort of stuff?

Why do you need a precedent to pass a law that improves the situation for every consumer and doesn't harm anyone dishonest?

>Why do you need a precedent to pass a law that [...]

When did I say that? I only claimed that having additional fees that are disclosed in fine print doesn't meet the legal definition of fraud, and that some rando calling it "fraud" doesn't make it so. That says nothing about whether I support California's SB 478, and in fact if you check my other comments I actually support it.

Different words have different definitions.

Annoying and burdensome is not the same as fraud.

You can want to be free of both without conflating them.

I mean.. if a judge can't see this then yea you have a big problem. Which the US does.

Why are you tolerant to fine print being in absolutely everything, and people needing to do math to know how much a candy bar costs before reaching the checkout counter?

Regulation that protects the consumer while simply asking that the final price is displayed anywhere shouldn't really be controversial, it just seems that in the US these tricks by retailers have been so widespread that it's now normalized.

I feel like you misread his explanation of why it's not fraud as an endorsement for how things work. He doesn't seem to imply support anywhere in his statement.

Aside from that, this law would not eliminate the need to do math. The sales tax would still be added. Despite "the price you see is the price you pay" slogan, it excludes certain government taxes and shipping fees. That exclusion includes sales tax.

Our reliance on "the letter of the law" rather than the spirit of it, giving rise to all these little loopholes in everything, are just another thing that makes living the USA so frustrating. "See, it's not fraud! It's just evil, and we're allowed to do evil if we disclose it in 4 point text!"

I'm sure the next decade will be full of litigation to decide what counts as a "restaurant" and what counts as an "add-on fee" and every business owner is just going to try to skate on by with the status quo using technicalities and acksuallys.

If you think the above poster's statement doesn't adequately justify that it isn't fraud, then you should respond to him. My statement simply stated that he didn't express support one way or the other for fees, and that even if the law is passed it wouldn't do what the parent wanted.

You're right, I did conflate endorsement with if this actually is fraud, my bad.

Probably the core of the disagreement here is different definitions of "fraud". For me personally, information that is misrepresented and hides behind the mask of an unreasonable amount of work to be correctly understood is a form of fraud, and I know others don't share that definition.

> Except it's not as straightforward as this. There's usually some fine print at the bottom that says there's a 20% service charge, taxes not included, or whatever.

The point is to forbid the fine print. I dislike many German laws around taxation and stuff but one thing we're doing right here is that all consumer-facing prices must be final. You can give a rebate if you want but you cannot charge a surplus. Prices as displayed must include VAT and any service fees, period. It's annoying that for some reason airlines do not seem to be bound to this, but the vast majority of businesses are. And I don't see the problem. It's so unfriendly when you put this and this and this in your cart / on your table and then when comes the time to pay, jumps a henchman out of the bush and demands some more. Where in the world does that translate into consumer satisfaction?

Fraud could be telling them their total is $12.75 and without disclosure charging their card $12.85.

Some cities in California require the surcharge be added to the menu prices.

I wish California had a second viable political party. (Not the California GOP, to be clear.)

Just curious which cities require it.

Wait, are you saying that some cities don't even require to undisclose these fees? How is that remotely legal?

I can understand when you’re ordering in-person and it’s printed clearly on the menu. But I’ve seen it in very small print on a sign near the register, which you can’t read until you’ve waited in line and reached the front of the line. And it’s certainly not OK when you phone in an order based on website pricing. The worst I’ve seen is at a bookstore where there’s no sign — just a line item at the bottom of the receipt.

There's a general difference in approach between the US and many other countries, where for example the EU will try to build a framework ahead of time, but the US waits for a specific thing to go bad enough to be worth regulating. So on one side you get broad imperfect documents that people like to make fun of here (EU regulation for AI), on the other you get constant hole plugging for obvious problems (like here).

Not really in this case. In the past it was not a law everywhere (in Europe) that pricing must include taxes, and you could often get the "added tax" surprise. This was then regulated to make it illegal. It's just that the US seems to take longer to get around to fix things.

Markets can only be efficient if knowledge of prices for competing goods and substitutes can be known. Drip pricing makes efficiency really, really hard.

That said, this is less about efficiency in my view and more about getting rid of the dirty little FU on the bill and allowing customers to avoid a surprise.

Restaurants are substitutes in calories sure, but menus, locations, decor, service will differ. I’m not sure I need efficiency in this space in that regard.

However, once at a restaurant, I would like to have a rough idea when I order whether I’m in my personal budget for that meal. From that perspective, this feels great.

If one doesn’t have to think about budget given financial prowess, this law matters little. If one does need to consider their budget but doesn’t, this law also matters little.

I don't know how prevalent my behavior is, but I eat out less since these random fees appeared.

If the price were simply 15% higher, I think would not mind (again I am guessing, who knows really - needs some sort of experiment).

I deeply dislike being quoted one price on the menu, but by the time I check out, it is notably higher. Once I add both the tax and the "fees," it is like paying for another complete entree. That unpleasant memory stays with me, even until the next time I consider eating out.

But then, I am not in the restaurant business, and I have lots of sympathy for those that make a living in such a razor-thin profit environment.

Do addon fees hurt more the businesses than help? I can't tell but I can provide my own behavior as an example.

Just leave a bad review. I've seen restaurant reviews mentioning this, and I always up vote those reviews as helpful. Thanks to California legislators, I won't have to worry about this in California anymore, but I'll still have to be wary in other states.

>Many business owners — and restaurant owners in particular — have been dreading the change, which is poised to ban separate surcharges that restaurateurs have increasingly relied on to pay higher wages to staff, and to absorb discrete costs such as San Francisco's mandatory health care payments for workers.

How can a meal in a restaurant near the University of Basel in Basel, Switzerland cost roughly the same as one in San Francisco when Basel's cost of living makes San Francisco look like an economically depressed suburb of Detroit?

Can you provide sources for all the figures in your comment?

Absent that, my guess would be real estate costs (ie. rent), which san francisco is infamous for.

https://www.sfgate.com/local/article/mini-chameleon-darryl-d...

$900 per month for 75 sqft is apparently a reasonable deal. https://web.archive.org/web/20231018182445/https://sfbay.cra...

I don't know what figures you're seeing, and I suspect restrictions and taxes Switzerland imposes on its labor relative to SF are very different. But in addition, Basel is like 2-3 miles wide and well connected. It should be highly possible for lower wage workers (from 3 possible countries! It borders France and Germany) to commute there. Mulhouse average salary is ~50% of Basel and right next door and has very cheap rental prices. The SF Peninsula has slightly higher difficulties importing cheap labor.

We could choose a Swiss city like Lausanne that borders Evian only after an expensive boat ride across the lake, or Bern. Prices are all similar. When I moved to Lausanne from the Bay Area (San Carlos) 20 years ago I definitely experienced sticker shock, although the prices were all honest.

No idea where it’s at now, but I’m sure the 10.5 CHF Big Mac meal at McDonald’s back then is alot more expensive now.

America is simultaneously too big or too small to ever have nice things, according to some.

Could they please also add all the federal, state, city, district, street tax into the prices please? The US is the only place I've ever been to where I never really knew what the price of groceries/snacks were going to be until after I've paid, no matter what it says on the label.

Everywhere else you don't know what you pay for a cup of coffee and what you pay in taxes to have a right to buy it.

Yeah you do, it's itemised on the receipt/invoice. You're legally required to break it down and provide a receipt so that business customers are able to correctly account for VAT. The only difference is which price goes on the tag/menu.

I've heard this argument loads of times in the US, and it's clearly based on a belief that taxes should add friction so people understand how expensive they are.

Most other countries have gone the other way and decided that transparent sticker pricing is more important than people understanding that their taxes are separate from the price of goods.

Incorrect. In, say, Europe, the final price is on the label and that's what you pay, the receipt lists the individual parts (core price, value added tax etc). And in Japan too - I'm looking at a receipt right now.

Not only that, no tipping. Wages are negotiated between employees and employers, customers have no obligations in it.

https://www.today.com/food/restaurant-surcharges-t263507

> In Milan, in 2008, his bill at a pizzeria included a charge for napkins. “Who eats pizza without using at least one napkin?” he asked, but was summarily told that the restaurant incurs a cost to provide linens. “I’m still not sure why I wasn’t charged for sitting on a chair or using my utensils to eat my food, since these items also require costs to maintain,” he said, only half jokingly.

> Two years later, in Florence, he actually was charged for the chair he was sitting in, or more specifically, the orientation of his chair. “My chair faced the piazza and, apparently, only a limited number of chairs had that view.” Even though he and his dining companion ordered more or less the same dish, Britton’s tab was a couple Euros more. He recalled: “The owners felt that it was necessary to charge more for the ‘exclusive’ experience.”

I can assure you crap like this would be just as prevalent, nontransparent and unenforced regardless of VAT and pricing rules.

It wouldn't actually pass already.

Besides, I'm sure there are stories of foreign tourists being ripped of by unscrupulous businesses in the US too, if you ask around enough.

For whatever reason, tourist hotspots in Italy have no shortage of unscrupulous business owners. If you've ever been to Rome in high season without a local guide, you either know what I mean or have some next-level karma cashed in.

How does that work for online shopping? Do you put your location in at the start? Someone else mentioned online shops and it never occurred to me before now to wonder how to implement that.

VAT varies across countries but not inside countries (except that there may be a different VAT for, say, foodstuff than other items, or services). For online shopping in EU you pay the VAT of the destination (W. You select your location and you'll (normally) see "your" price, and in any case you'll always see "including VAT" mentioned.

that's not true. you have it written explicitly in the final check. you just don't have to do the mental gymnastics of figuring out how much you'll pay before ordering, which is absolutely absurd

The only "good side" of having price sticker without tax is that taxes can change as they wish and it cannot be used as an excuse to change the price anyway. It's not that common but sometimes governments do apply VAT changes and usually sellers uses it to push prices up more, because people are already expecting it. Or if the VAT goes down, they don't reduce the final price that much.

But overall, as an European, I prefer how we do it.

Huh? It's typically stated on receipts, by law.

Mostly because, and this is the kicker, that does not matter to the vast majority of people buying coffee.

If I buy a cup of coffee with a listed price of €2, I pay €2. I know that 9% of that is value added tax (here in the Netherlands), and the receipt will show that too — if I care, which I usually don't.

Value added taxes are pretty much a fact of life. I know it's there, and there is absolutely no need to constantly bug me about them by doing funny stuff with the pricing; just show me what I have to pay at the till.

Companies are legally required to break out VAT taxes on a bill because it’s a value added tax so it matters if something is an end product like a car or something request to make that end product.

Basically if you buy a PC and the VAT on that sale was 200$ then the company selling you the item might send in 50$ and receipts for 150$ in VAT on items they used to manufacture that PC. Without that exception there’s a huge incentive to vertically integrate manufacturing which would have negative economic consequences.

So? The receipt still shows the VAT amount, as required. This is not a problem.

I was trying to clarify for anyone who might misunderstand your comment.

It’s fine not to look at a receipt for the details, but I felt someone reading your comment may not realize it was available and you just didn’t look at it. You included a “and the receipt will show that too” but that’s the kind of thing people gloss over.

To be fair, if people will gloss over a random part of an answer, they'll gloss over a random part of another answer too.

Sure, which is why I opened with the important bit: “Companies are legally required to break out VAT taxes on a bill”

Of course we do, the taxes are listed in the receipt. We just know how much we are paying ahead of time.

You will need to have different prices on the drive through and dine in (and another for to go even if order at the dine in register).

https://www.taxjar.com/blog/food/sales-tax-by-state-to-go-re...

https://www.cdtfa.ca.gov/industry/restaurant-owners/ - and in particular https://www.cdtfa.ca.gov/lawguides/vol1/sutr/1603.html

Which is why it should be mandatory to show at least three numbers on price labels: product or service price, tax (optionally split by taxing authority), and final cost.

Fees are different from taxes in that they're not mandated and the customer has no direct way to affect them.

I’m more sympathetic to this. There are plenty of cases where the tax rate is a solid “it depends”. For example, in some places a cold burrito is a non-taxable grocery item and a hot burrito is a taxable meal. A local place here has one tax rate if you order your pie boxed up to go (grocery) and another if you ask for a fork and eat it there (meal). It’s a Schrôdinger’s tax where you don’t know what it’s going to be until you check out.

And these categories aren’t known until you check out? Come on…

I honestly don’t know all of them. Those are 2 examples I’m aware of.

They can still label them correctly. Here we have Tesco normal prices like £20 for a sandwich, £3 with a clubcard, and they just write both prices together.

But that’s not “£20 unless you microwave it, and then it’s £25”, is my point.

Also, that better be a helluva sandwich.

> “£20 unless you microwave it, and then it’s £25”

You just showed it can be written easily.

£20 (£25 microwaved)

Item: (Served) (cold takeway)

Buritto: 25£ 20£

See trivial...

And that's exactly how e.g. coffee is priced in various coffee shops in Europe: Two prices, One is served, the other is takeaway.

It's the way they get you to hand over your information with the clubcard.

California is implementing income based pricing for home utilities provided by private companies.

I don't think it is impossible that they will try to do the same for groceries. The cost of beans would then depend on your income tax bracket

I've seen this at hotels and such, but never in my life have I been presented with a mandatory fee at a restaurant. I get the tax and I tip and that's it.

Is this a California thing in recent years? Is it just that I don't eat at the right kind of restaurants? Where and when did this start happening?

The original prime culprit iirc was Jon and Vinny's in LA. I've had the mandatory service charge (which is not given to staff like tips) for several years. There are whole Reddid threads on it with contributions from ex staff going back years.

It’s not extremely common but I bump into it enough to triple-check my bill before deciding how much to tip. If there’s a service fee, I subtract that from what I was going to tip so that I’m not double-charged for service.

Here's an article on the new fees - https://www.today.com/food/restaurant-surcharges-t263507

>In the NRA’s August 2022 Restaurant Business Conditions Survey, of 4,200 restaurateurs surveyed, 16% have added surcharges.

People have been sharing them online lately. Here's a few examples -

https://www.reddit.com/r/mildlyinfuriating/comments/12huhmm/...

https://www.reddit.com/r/mildlyinfuriating/comments/w3nep1/t...

https://www.reddit.com/r/ImpracticalJokers/comments/18ee5l5/...

https://www.reddit.com/r/mildlyinteresting/comments/z89xci/t...

https://www.reddit.com/r/mildlyinteresting/comments/1c9t4b6/...

https://www.reddit.com/r/mildlyinfuriating/comments/14ss46p/...

Thank You! these are hilarious. I love the helpful tipping math giving options for 18, 20, and 25% tipping. A hard sell is illegal in the as far as I know.

Its probably unrelated, but this is widespread in Italy (for centuries), as "coperto" (per person fee; to pay for bread basket/silverware/tablecloth).

Was originally intended to discourage people from sitting in a place all day without really consuming much.

Personally I think the concept is fine, and actually much preferrable to tipping, but it needs to be culturally ingrained/expected; doing something like this in the US right now is just scummy.

Happens all the time in CA (I’m near Palo Alto). It’s at high-end places (that I don’t frequent) and fast-casual joints, both chains and independent restaurants. I’ve even seen it at a bookstore that calls it a living wage surcharge.

Also common where I live in the Northeast. Beyond autograts you'll see things like a "kitchen appreciation fee" which is often in the 3-5% range. But in MA it's illegal for back of house staff to take part in tip pools, and that's the reason for it.

In 2019 this was a joke!! - https://youtube.com/watch?v=HFxpBJrLgXY&t=1m30s

"we just gouge you on the price... it's highlighted though, so it's transparent." People laughed cuz it was ridiculous.

In 2024 it's reality and we have to make rules against it! Holy shit.

I want the US government to pass a law requiring all taxes to be included in the listed price at any retail outlet in the United States. It is ridiculous to see an item you're interested in buying, check the price tag, and get only an approximation of how much money you will have to spend to acquire it at the register.

Often with small-dollar items, the exact amount of money is relevant. I might have a $5 bill, but not have $5.39. So if that item that says "$4.99" on the price sticker costs $5.39 when I get to the register, that is just a nuisance and a waste of everyone's time.

And for what purpose? I can't believe that retail outlets don't already just price tax into the stated price.

Are they concerned that people are going want to shop elsewhere and pay the same amount of money but also go through more nuisance and do more math in their head along the way because they prefer to initially see a lower price?

Pricing without tax lets you use the same menu across different states.

I’d love to see pricing include tax… and then I think about how difficult that’d be to implement online

Exactly as difficult as applying the taxes after sale...

Except you’d have to provide your address before it could show you any prices at all.

And different cities. https://www.cdtfa.ca.gov/taxes-and-fees/rates.aspx

Or, businesses could do like they do in Europe: set the same price after taxes in every state.

Different states? Different counties! The US tax situation is set by state and county and sometimes city, so two Starbucks on opposite sides of the street may have different tax rates.

Now, of course, you can still solve for it by charging a price that in aggregate is enough to include sales tax everywhere, but the way sales tax is calculated currently that actually can make it more difficult (as you have to track the "real" price which you solved for).

I'm in the opposite camp, I want EU to adopt US system, and list fees and taxes separately :) Better yet, I want to have a system, when your gross salary is paid to your bank account, and then you have to wire the money to a tax office by yourself. All that to raise awareness how much money actually goes to a business, and how much is stolen by the government.

If there’s anything worse than paying tax, is having to waste my time paying tax when someone else could have done that for me, and more efficiently too.

That's a part of the problem though: governments made paying taxes so seamless that many people simply are not aware that they are paying them. I mean: they know that something like social security, or VAT exists, but they have not a slightest idea how much money it really costs them. Raising awareness leads to better choices in the next elections.

You want to steal my time and trash my public services. And you promise that it’s all for my benefit. Just no.

I’d call you paternalistic, but you sound more like an abusive father.

Would you mind saying which country you live in? Because if you believe that all, or even majority of your taxes goes to public services then either you're extremely naive, or you've found a perfect place to live, and I want in :)

It is because sales tax is highly irregular, highly local, and changes often without any coordination across the multiple entities that can impose sales taxes. Manufacturers control published pricing for their products in advertising, physically on the container, etc. They are not subject to these local retail taxes, which can change the price >10% between locales.

This discrepancy is intrinsic to the fact that manufacturers set and advertise prices and then local governments effectively modify those prices unilaterally. At some point the customer will have to contend with the reality that the price at the manufacturer and the price at checkout don't match and control of that is spread across many organizations.

That this problem is unsolvable doesn't really leave much hope for solving actual existential problems like climate change.

I'm not from the US, so i'm honestly curious, does sales tax really change that often?

The reason i'm asking this, is because here in The Netherlands there was some news a couple of years ago about changing tax on fruit and vegetables. Our tax authorities basically said: Nope can't do, we need a year to adjust our software for this. This should give you an indication of how often our tax rates change here.

It depends on the locale but usually not more frequently than once per quarter. Aside from this, one aspect that makes it complicated and intractable is that the rules for applying sales tax to various goods sometimes require very late binding -- the correct tax rate cannot be known until checkout because it is dependent on customer decisions at checkout. The common example of this is the definition of "prepared foods", because something you are going to eat immediately gets taxed differently than something you are going to take home. Tax authorities have standards of evidence at checkout based on customer behavior for food items that could reasonably fall into either category.

An argument could be made that sales tax should have rules that don't require this type of very late binding. The issue is that legal authority over this is completely decentralized as a Constitutional matter and there are thousands of overlapping tax authorities. There is no feasible way to compel them to all do something sensible, so the system has to operate under the assumption that some tax authorities will issue these types of rules as a matter of robustness.

>I'm not from the US, so i'm honestly curious, does sales tax really change that often?

It changes more often than you'd expect, but it's not daily. Perhaps yearly, but certainly across space too. Government in the US is very "layered." Our states are basically autonomous countries free to set their own taxes. Additionally, many states give sales taxation authority to municipal governments. There's little coordination across states or municipalities, so you might pay 7% sales tax on restaurants and 1% for groceries, then drive across the river to a different city/county and pay 6% and 2% respectively. There are also sales tax holidays where the tax is suspended for a given period within a state, but only for certain items.

Basically, it's very complicated due to the lack of coordination between levels of government in the US.

Geographically, they change with each city and county, so every 10 km or so.

Temporally, they typically can change annually as voters or the legislature pass new measures.

Online purchase taxes change depending on where the package is delivered, so you can buy multiple items with different costs

Then simply don't put price on product. Most products survive without it. It is not like tablets or smartphones have the prices engraved on them...

I like that the pushback is people have to begrudgingly pay the full prices but won’t pay the full price if given the choice upfront.

Do none of their customers come back after knowing the honest cost?

I think it's more like: you get pinged with a lovely cheap-looking offer from a nice restaurant, and so you click into the app and start building your pizza (or whatever) and by the time you see the real price you...just want the pizza.

The good ol' https://en.wikipedia.org/wiki/Bait-and-switch in a way.

These sorts of laws are there to hide the fact that the government adds lots of taxes onto everyday goods. When it's 'baked into the price' there is no way to tell if the increase is because of the business owner or the government, and most people will just blame the business owner.

It just doesn't matter. If my coffee is $5, it's $5. It doesn't matter to me if $4.75 of that is coffee and $0.25 is tax, or if $4.50 of that is coffee and $0.50 is tax. I'm paying the same amount either way. I'm not going to suddenly decide not to buy it depending on the tax rate.

I would like it if California passed a law against hidden state taxes.

Most recently, state regulators are making utilities implement income based pricing for electricity. This circumnavigates the sticker shock of state income taxes and democratic approval of subsidies.

Good point. Unfortunately the CA legislature is the entity that passed the income-based utility pricing.

Your description is wildly misleading. The electrical utilities already discount electrical bills for low income customers. https://www.cpuc.ca.gov/industries-and-topics/electrical-ene...

The utilities wanted to change their pricing to have a fixed charge to be connected to the grid (as in most other states) and to lower the per unit cost of consumed energy. The legislators simply required that the fixed charge also be discounted for hookups to deed-restricted affordable housing and for low-income customers. https://www.cpuc.ca.gov/news-and-updates/all-news/cut-reside...

I think my characterization is less misleading than yours. This isnt the application of existing discounts to an industry initiated desire for a fixed fee. The income based fixed charges to come into compliance with new state law AB-205 [1]

Here is a summary from the AB-205 itself: "The bill would eliminate the cap on the amount of the fixed charge that the PUC may authorize. The bill would require the fixed charge to be established on an income-graduated basis, as provided, with no fewer than 3 income thresholds so that low-income ratepayers in each baseline territory would realize a lower average monthly bill without making any changes in usage."

Either way, the law and it's predecessor require income discrimination by private companies, opposed to subsidizing low incomes from the general fund. It is absolutely a income redistribution transfer payment that doesnt go through the state taxes or the state budget. Ironically, this bill was passed as a trailer to the state budget [2].

[1] https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml...

[2] https://calmatters.org/commentary/2024/04/fixed-utility-bill...

You're still misreading the law. AB-205 does not require the utilities to have a fixed fee. It simply sets the requirement that if they do introduce a fixed fee (which was previously regulated to be capped at $10), it have discounts for lower income customers. The fee structure must be approved by the CPUC, and the $24.15 fee is lower than the $51 fee that PG&E proposed. This matches the previous program, which required that the utilities set a discounted rate for lower income customers.

> Either way, the law and it's predecessor require income discrimination by private companies, opposed to subsidizing low incomes from the general fund.

The latter would be much more expensive to administer. I don't know why you want to pay higher taxes.

> Ironically, this bill was passed as a trailer to the state budget.

The bill is about regulation of utilities and includes changes to how utilities can apply for and use assistance due to COVID-related non-payment of bills. That affects the state budget.

The fee structure part of the law really isn't that complicated. You should consider whether the news source that you got your information from is reliable.

Now if only they’d outright ban tipping.

Businesses should pay their employees, not the customer.

Tipping culture in the US is insane.

Tipping culture is just another tool of capitalism to exploit the working class.

Is that true? Or do Americans really like having servants?

It appears to be true based on restaurants being one of the worst industries for wage theft. Also tipping enables restaurants to give the impression that good earnings are possible without actually having the wherewithal to provide good wages, meanwhile not taking responsibility for workers.

Completely agree that wage theft is terrible, and tipping is silly. But it seems hard to deny that people love servants when they love their DoorDash, lawn services, and maids so much.

Considering slavery is still legal as per the 13th amendment, yes. We are addicted to cheap/free labor for businesses.

That doesn't actually mean anything, especially after I've seen how much you have abused definition of "exploit". Literally anything less than an impossible 100% profit pass-through is "exploitation". While operating under utterly-stupid economic assumptions about fixed universal values to add insult to injury.

When Americans travel, they bring their tipping culture with them. I blame, for the increasing tipping culture perceived personally and anecdotally, the americans

You’re not wrong. We don’t even having a “serving wage” in Ontario; all waitstaff make at least minimum wage ($16.55).

But we follow America to a tee with this sorta thing, and you’re some sort of heathen if you don’t pay at least 20% extra for the privilege of eating out.

Just ignore it. Tips are for above and beyond service here in the Netherlands (and in most of Europe). Anything below 'actually quite good' does not warrant a tip. Let the American tourists tip if they want.

Amen. But we should reframe this: these workers should be paid a fair wage, tipping will then become optional and significantly reduce.

Americans should raise service worker’s wages to a decent living salary.

It’s California, they’re paid a minimum wage of 16 dollars per hour before any tips.

Keep in mind that it is often the tipped employees who push back the hardest on getting rid of tipping. The people I know in the restaurant/bar industry would be taking a giant pay cut if their establishments switched to paying a "living wage" without tipping.

Many of these workers are paid a fair wage. Minimum wage in Seattle is $40k, higher than the median wage in many European countries. With tips they might double that. The biggest beneficiaries and proponents of tipping are the workers themselves, empirically their net wages decline when tipping is not allowed even when wages are increased to offset that.

Tipping culture has turned insane, spreading from California out.

That said, I’ll still take it (in restaurants) over a lack of tipping. It depends on the country, but in quite a few the wait staff are… significantly less motivated to actually serve you, to put it nicely. It’s no fun to run out of water and then wait ten minutes, realize they’re never coming and you haven’t even seen them to flag them down, and then either get up to find them or just continue eating without anything to drink.

For me the problem with tipping culture isn't with sit-down restaurants—that's one of the few places where I can see a slight argument to be made in favor of it. What irks me is that tip prompts have started showing up in order at the counter take out places, where I'm literally going to receive no additional services besides the food itself, the cost of which is presumably baked into its price.

It's not fun either to have waitstaff hounding you with fake smiles all the time, pretty exhausting to be repeating "no, not right now, thank you" every 5 minutes when they come to ask if there's anything else. Worse, in a lot of places it feels they just need you to hurry up, more tables served, more tips.

I don't feel I get "good service" in most places in the USA, I get waitstaff interrupting my table all the time to check if we want to order more, it's quite grating. I just need waitstaff that are attentive when I'm looking for them to order, not to be pushed into ordering or rushing me out.

Pretty simple treat it in every single case as a bribe. Both briber and bribee go to jail. Minimum sentence should be lengthy. At least a few years. Only solution against this sort of corruption.

California already doesn't have a separate minimum wage for tipped workers. Unfortunately, it hasn't had an effect on tipping culture because this varies by state and because of inertia. If everyone else is still tipping, you don't want to be the curmudgeon who doesn't. https://www.dfederlaw.com/articles/the-minimum-wage-requirem...

I’d love if Canada had retailers bake sales taxes into the price. What you see is what you pay.

July 1st can’t come soon enough.

Do hotels and rental cars next! Terrible shopping experience. "Resort fees" are total bs.

As far as I can tell this law isn’t limited to restaurants. It will be interesting to see if big hotel chains will have websites that operate differently in CA and elsewhere (like with CA privacy options). Hopefully this will benefit customers outside of CA as well.

Nationwide please.

The federal government doesn't have authority over the state and city taxes, nor are the mom and pop restaurant off the county road up north doing any interstate commerce that it can use to mandate changes.

It’s not taxes here. Restaurants are adding 20% fees onto meals and charging them at checkout time when the bill comes. How that’s not false advertising is beyond me. I can’t imagine Target adding a random surcharge as I’m leaving and no one losing their mind.

Now can we make delivery companies do this?

This is an interesting question. I don’t think the current law would apply to fixed delivery fees, but it could apply to fees that are tied to the cost of the order. I don’t think the fees are typically linear, though I don’t know since I try to avoid these services as much as possible.

> Restaurant owners like Laurie Thomas, who heads the Golden Gate Restaurant Association, say the changes will bring higher prices and sticker shock, which could then raise a psychological hurdle in customers' dining habits. That, in turn, will hurt restaurants and their workers, she warns.

> "If it's in the core price of the menu, there will be a pullback" in patrons' spending, she told NPR shortly before the attorney general released the guidelines. "There are some people, I think, that are hoping that the restaurants will just absorb that cost, because we've seen people say, 'Oh, it's too expensive with the service charge.' "

> Under the new guidelines, Thomas' organization said in an email to NPR, restaurants will be forced to impose "significant menu price increases." And if customers eat out less, it warns, "Not only will restaurants struggle, but workers will lose hours and jobs."

Suggestion: Instead of mandating honest pricing, CA should just allow their tax collectors to add fees and tariffs and surcharges and other crap to the tax bills of businesses that do not do honest pricing. Then, when those businesses complain, whine about the pain of government having to absorb the lower revenues, and government workers losing hours and jobs, and having to make cuts to various feel-good programs, and ...

I know it's more complicated than this, but whenever I see businesses complaining about how including all the fees upfront will harm their business I can't help but read it as "Our business wouldn't be viable without the ability to lie to our customers."

Same with people who complain about paying a living wage or basic benefits. I once had an Uber driver who, apropos of nothing, started telling me that he was driving for Uber because he had to shut his old business down after Obamacare went into effect because he couldn’t afford to provide health insurance for his employees. I just sort of nodded along because I didn’t really have a choice, but I couldn’t help but think, “Sounds like the problem was just that you weren’t a very good businessman.”

Curious if he thinks uber should be providing health insurance for him or not.

That one I'd be more sympathetic to. The fraction of GDP that America's health care sector rakes off is far out of line with other first-world economies. (And, by most metrics, their health systems deliver same-or-better results.) In effect: Any company which wants to employ actual Americans (one who'll have to get heath coverage) is forced to send huge-and-growing protection payments to America's health care system mafia.

Be that as it may, it's not like the ACA invented employer-sponsored health insurance. Health insurance is just part of the cost of doing business in the United States and has been standard for full-time employees (and many part-time ones) for decades. In this particular case, I believe he wasn't providing health insurance for anyone but was now required to because his company was over a certain size. (Something along those lines, it's been a long time.)

Additional government regulations will always require additional resources by a business to be compliant. By over regulating, the government is killing small businesses. The only organizations that can afford the resources to manage government bureaucracy are large companies. So I wouldn't be so quick to dismiss that Uber drivers statement.

Not mentioned in this comment are that those large companies are the ones who lobby for such regulation, so they can kill small businesses and gain their customers

Providing health insurance for full-time employees in the United States is just part of the cost of doing business. It's not cheap, but it's absolutely something you can budget for. IIRC this guy had over 50 employees working more than 30 hours a week (I think in a landscaping business) which is why he had to start providing healthcare. If he couldn't afford to pay for health insurance for his full-time employees, then frankly, that means his business was only ever viable as long as he was able to exploit his workers with substandard pay and benefits.

I don’t see how it’s more complicated than that actually

There are some situations where the business owners are correct, especially if their competitors are permitted to tack on extra fees at checkout. Sometimes it is necessary to establish a global rule to prevent prisoner's-dilemma defections.

Why are they opposing the law then? Seems like it would solve the prisoner's dilemma issue.

Because they're not just engaged with their competitors. They also have relationships with the government and with suppliers (of food, of labor, etc).

Below the line fees are a political statement, and act as political back pressure against the purported source of some costs.

For one, there will be an immediate price ratchet that would scare customers away, and they would rather avoid that.

Two, customers (yes, that's us I'm talking about) are dumb and superstitious when it comes to numbers.

$10 = oh no, that's bad

$9.99 = oh, that's perfectly fine!

By raising 'visible' prices for everyone some portion of the customers will shy away from the product, say by buying groceries rather than eating out.

They could always lower their prices to the ones they’d been advertising. Sure, they would lose their scam money and that might hurt their finances, but that’s the choice they made when they came to count on the free money.

>By raising 'visible' prices for everyone some portion of the customers will shy away from the product, say by buying groceries rather than eating out.

Respecting the agency of customers to make informed decisions for themselves. How terrible.

Heh, especially for the bigger companies they barely see the person buying the food as the customer, instead it's the investors in the stock as the customer. They've not respected the 'buyer' for a long time, and is one of the reasons why we have customer protection laws on the books.

I mean subsidies work this way and is why companies hunt around for the best ones they can find.

> I know it's more complicated than this

it really really really isn't

Businesses hate capitalism. They don't want to compete on pricing and quality.

If you're doing capitalism correctly, there is no competition. You control pricing, and quality is irrelevant. It's all about the power of money.

Businesses hate markets, because it's sink or swim and almost everybody sinks.

>They don't want to compete on pricing and quality.

I support this bill for other reasons, but price competition is a poor reason. Is not having all-in menu pricing really detrimental to price competition? My impression is that most restaurants have the same cost structure of menu price + tax + tip. I very rarely see restaurants trying to add any sort of charge on top. Therefore, at least when it comes to restaurants competing with each other, this law is a non-factor in most cases.

The thing is we're seeing more and more restaurants doing this. It's like a cancer cell, there's only one at first, then if its successful it's conquered the entire organ market rather quickly. This is about cutting off a bad practice we're seeing spread in that industry.

And I want the bill to spread to other markets that love tacking on hidden fees (looking at you Airbnb).

I don’t get it. People are charged the fee anyways. Why would including them in the displayed price create higher prices?

Because they will, out of the habit, mentally compare those prices to the prices they are used to see printed in the menu. Basically double-counting all the taxes and fees.

They do not say it will create higher prices, it will create AN IMPRESSION of everything getting more expensive. It's all about perception, that will cause people to be more frugal.

When searching for online pricing, seeing 'menu' prices gives one impression.

Hey, this burger is only $6?! Great value!

So... you end up going there based on some mental impression of getting a $6 burger for... $6.

Because the restaurants will raise the fees that are baked in the prices.

I suppose the theory is, fewer people buying food when the menu lists the real price, revenue goes down, we must raise prices to keep revenue up.

There are a lot of people who respond like this. It reminds me of years ago when JCPenny stopped having "sales," and they just set prices to be permanently low. [1]. It cratered their business. It turns out people love having coupons and feeling "smart" about getting a good deal; coupons are sort of a way to gamify shopping, even if you actually end up paying more.

In the case of fees, there are apparently many people who don't consider the fee part of the product, and are an external to what they are purchasing, or out of the control of the restaurant. For me, and probably many like us, the sticker shock comes at the checkout with the final price, and I have zero hesitation to cancel the order at that point. I refuse to use delivery apps, or even online ordering from many restaurants, for this reason. I hate the feeling of being psychologically manipulated into buying something because I'm already "committed" at the last step, where they can add fees. Concert and sporting event ticket hubs, like StubHub, are the same. I'll add 4 tickets to an event at a reasonable price, and the final checkout price is $200 higher, so I'll find something better to spend my money on instead.

[1] https://www.forbes.com/sites/panosmourdoukoutas/2017/02/24/a...

Wikipedia has a good page for getting started on the practice of

https://en.wikipedia.org/wiki/Psychological_pricing

But how does that… create higher prices?

> It reminds me of years ago when JCPenny stopped having "sales," and they just set prices to be permanently low. [1]. It cratered their business.

It was not so simple according to people who worked and shopped there. Not all prices were lowered. Quality declined. They made many other changes at the same time. They bet on attracting young people to an uncool brand.

They're warning about the reaction of customers who encounter higher prices on the items they're looking at.

Even if we assume/pretend that the total for some specific order might not change, they're argument is that higher nominal prices on the menu will discourage customers from ordering as much in the first place and thereby depress the industry.

But of course, even if so, that's by way of customers getting clearer insight so it's not the most convincing argument from the perspectives of ethics or even market efficiency.

The net price is still the same. You could make the reverse argument just as easy that if people are better informed they will spend more!

> ... say the changes will bring higher prices and sticker shock, which could then raise a psychological hurdle in customers' dining habits.

This person is essentially admitting that people may not eat out if they knew they are being overcharged.

If a business relies on false advertising, maybe it shouldn't exist.

Cute, Thomas. Know what’s worse? Getting the check and realizing you lied to me with false advertising.

But when everyone does it, it's just call "standard practices", and there are a million crappy little things like this you're already used to.

Yep. Fortunately it’s far from standard practice around here. There are a few restaurants I know doing this. Most don’t. The restaurants who aren’t doing this nonsense have to be thrilled that the others have to compete honestly now.

I don't mind separate fees for separate services. Take-out should cost less than dine-in. If you waive the table fee that makes sense.

> The law is simple: the price you see is the price you pay

Not true when you still have to tip.

You don't have to tip.

You don't. However, not tipping in the current system makes you an asshole.

In a perfect world tipping wouldn't be required, but we don't live there right now, and until then all you're doing by not tipping is hitting some working class person in their pocketbook.

You don’t have to tip, you just normally do. I had one abysmal experience waiting 90 minutes without our waitress even checking in on us, so I didn’t tip.

I'm curious about where one draws the line.

A "tip" has gone from some extra cash for an unexpectedly great job, to essentially expected.

Except you have to tip, because tipping is baked into the laws in the US. Tipped workers have a minimum wage of 1/3 of the regular one. Not tipping even the minimum, say, 12% is basically a crime.

Or, you could argue that the existence of such low minimum wages are the true crime, because now you have this shitty Nash equilibrium where you must beg for tips because everyone else does.

"Buy beer at our place. Pay us 5 units of currency and we will get you this beer."

There's absolutely zero reason for things to be more complicated than this.

For the employer, not the customer.

They are legally required to make up the difference if the tips don't equal or exceed the normal minimum wage.

40 minutes after being seated is my limit before I walk out or whenever someone seated after me is served first. Let them eat the cost of their poor service.

Many people don’t tip, and tippers are subsidizing those assholes via lower menu prices.

Nope. Their employers are not paying them full wage. That's the problem. Tippers are subsidizing the restaurant owners and enabling the practice while feeling righteous about their destructive behavior.

Of course the best behavior is to completely avoid any place of business that runs on tipping when possible.

You didn’t counter my point.

Restaurant X outlaws tipping and raises prices to enable wait staff to make the same income. Now non tippers are paying more money and tippers pay less.

Yes, you're right. I didn't counter that point because it was immaterial (of course the cost of the meal has to be paid). I was countering your assertion that not tipping made people assholes by pointing out the destructive and unethical effects of tipping.

If you grew up under an unethical system and had to muddle through it it is not honor to try to force the same broken system on all others just because you endured painful experiences. It's nasty.

I boycott tipping restaurants on ethical grounds. Voluntarily exploiting a broken system for your personal benefit makes you an asshole.

This isn’t the days of slavery where buying food required you to support an unethical system, you can go to a non tipping fast food joint, cook your own food, etc.

If you live in a tipping society, you should tip (for services like being waited on). As others have said, you don't have to, but that makes you the <explicative>.

Is there anyone who thinks it's actually a better system than European-style tipping (i.e. an entirely optional way to thank people for particularly good service) rather than just a necessity considering the system is what it is?

As a Brit I do always tip when visiting the US, because I understand the implications of not doing so, but I've never understood why people on both sides of the equation (tippers and tippees) aren't lobbying politicians to change it such that menu items are priced the amount you'll actually have to pay - and yes, I feel the same way about VAT not being included in the labelled price, but that's been discussed in a different set of comments higher up the thread - and so that workers are paid enough to live on without getting any tips. And then they can choose whether or not to be extra friendly or to go above and beyond their responsibilities in the hope that people will feel they deserve a tip as an extra bonus on top.

I can't remember ever hearing anyone in favour of USA-style tipping for any reason other than it being the system they're used to, so would be interested if anyone does have a different argument for it.

There would be winners and losers if we switched systems, as with any change. The winners would be consumers and workers in lower-end restaurants where tips are generally small. The losers would be restaurant owners and workers in higher-end restaurants who make good money from tips under the current system. Right now, the potential losers are a lot more vocal and engaged than the potential winners (the system is shitty but not so shitty that most consumers get worked up about it, and low-wage workers just don't have a lot of political power).

Couldn't the higher-end / more expensive places just put their prices up by x% the same as a low-end place?

Is the fear that if both cheap and expensive places moved tipping to higher prices (as an example let's say every single restaurant just raised menu prices by 15%) then more people would choose to go cheaper than do in the current situation of not thinking about accurate total cost until it comes to paying the tip after the meal?

I know we all have cognitive biases so it's possible something like that would be the case, but from a purely logical point of view it seems that if people are happy to pay $500 per person for a meal and to tip $100 on top of that, then they should also be happy to pay $600 for a meal that doesn't need tipping, just the same as for meals that cost $15, and I feel that if it were a universal change (ie not just a single restaurant announcing "no tipping here" but a national or at least state-wide law) then there wouldn't be a huge amount of people chenging from visiting expensive to cheap places.

> "winners and losers if we switched systems, as with any change"

With many, even most, changes that's literally a requirement of the change - with tax changes that keep the total tax revenue the same you have to have some paying more in order to have others paying less. Or if the change is to raise more total tax revenue to fund more social benefits, some tax payers need to pay more in order for some people to get more help. Etc.

But in this case the only losers would come from other people acting on illogical cognitive biases (with the exception of people who currently choose not to tip, or to undertip, who would then be forced to pay the real amount - but surely those people aren't a significant lobbying group, not a sympathetic group that others feel need protecting). Unless I'm missing some part of the equation and there is actually a reason higher-end place for necessarily do worse under a system where tips are included in the sticker price?

> But in this case the only losers would come from other people acting on illogical cognitive biases (with the exception of people who currently choose not to tip, or to undertip, who would then be forced to pay the real amount - but surely those people aren't a significant lobbying group, not a sympathetic group that others feel need protecting).

As I see it, there are two big groups of losers: restaurant owners, who fear that people may dine out less because of the "sticker shock" mentioned in the article, and any tipped staff of restaurants, who fear that their take-home pay will go down if they are paid an hourly wage with no tipping. So even if the "sticker shock" problem corrects itself after an adjustment period, the amount of money to be made as a waiter could very well permanently go down.

The waiters' worry just needs to be addressed by, at the same time as banning tipping, a) removing the current loophole that allows hospitality staff to be paid less than minimum wage because tips will make up the difference and b) raising minimum wage anywhere that it's too low. It's crazy that instead of laws to prevent someone working full time as a waiter from being paid too little to live on they instead have to rely on customers not being too stingy and not tipping enough.

The fact that nobody in other countries wishes they had the US system should be a big clue as to how bad it is - no European waiter is thinking "I wish my salary were half what it is and customers were told their tips are what prevents me from starving". It really isn't a "some winners, some losers" situation it's just a shit situation.

> removing the current loophole that allows hospitality staff to be paid less than minimum wage because tips will make up the difference

This isn't really the issue: the employer is required to make up the difference if the worker's pay does not meet or exceed the normal (non-tipped) minimum wage. The issue is that the waiters are making serious money off of tips.

Say they are making $5/hr for a six hour shift and that they serve 10 tables who each buy $100 worth of food during that shift: then their total pay is going to be 6 * 5 + 10 * 15 = 30 + 150 = $180 (since the custom is to tip at least 15% of the cost of the bill). That means that in order to make the same amount of money without tips, they would have to make $30/hr (and I've chosen pretty low numbers; you can imagine that in more expensive restaurants the money just gets better). That's a pretty expensive wage and it seems unlikely that most staff would get it.

> no European waiter is thinking "I wish my salary were half what it is and customers were told their tips are what prevents me from starving"

Obviously it depends a lot on the kind of place but I would guess that in high-end places, American waiters are doing better than their European counterparts (at least in terms of raw wages), as illustrated above. Servers and bartenders in full-service restaurants are by and large pretty big proponents of the tipping system.

In any case, I'm not a proponent of this system at all; I'm just trying to answer your question of why it hasn't changed by showing that there are in fact groups that benefit from the system as is, so it's not pure inertia that prevents us from getting rid of it.

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