PASADENA, Calif. — When the first of July comes around, dining customers might notice the cost of their favorite dish, at their favorite restaurant, is higher than it used to be. Those customers would not be imagining the price increase.
That's because a Senate bill will go into effect on that date. Nicknamed the honest pricing law, the SB 478 bill is meant to protect consumers from deceptive price advertising by showing them the all-in cost upfront instead of upon checkout.
SB 478 was passed in late 2023, but lawmakers delayed its implementation until July 1, 2024, to give restaurants a chance to adjust to the impending change.
When Thomas and Vanessa Tilaka Kalb opened Agnes Restaurant & Cheesery in Pasadena during COVID, they knew they wanted to create a space where their staff was taken care of like family.
"Everyone that's connected to Agnes helps it succeed," said Tilaka Kalb. "And it succeeding offers 70 people employment, affects multiple families."
To do that, the couple instituted a 4% surcharge under Healthy LA, which was meant to provide health care for their staff. Dining customers would see this charge on the final bill.
Vanessa Tilaka Kalb explained how it works.
"This is optional," she said. "It's not a gratuity, but it is optional. The guest has the option to have it removed, no questions asked."
Restaurants across the state were doing the same thing, with surcharges ranging from 4% to up to 20%. However, after July 1, all California restaurants like Agnes will no longer be able to charge the healthy la fee or any other surcharge. Instead, restaurants will have to absorb the cost of those prior fees into the cost of every dish.
"It's an extra at least $5. I have to account for the taxes, the insurance, all the overhead," Tilaka Kalb explains. "And once I've paid the staff from this food team, what I'm left with is what is going to be contributed to that health care. So now something that was $20, I now have to charge $30 for."
California Senator Bill Dodd co-authored the bi.
"You're advertised a price, and by the time you check out, that price is completely and totally different," Dodd said.
Tilaka Kalb has a counterargument.
"We believe that California could really reconsider how they're applying this to restaurants," Dodd said.
However, Senator Dodd explained that the bill was not written originally to include restaurants. Instead, Dodd says he only meant to include service goods like hotels and event tickets.
"The attorney general is looking at this through the legal lens and the way the bill was written originally, and suggesting that somehow this does apply to restaurants. I don't think it does, but I'm not an attorney. But I also hope to write a letter to the journal and let them know my legislative intent was not to include restaurants, at all."
Attorney General Rob Bonta's office sent this in response:
"SB 478 is about making sure that the price consumers see is the price that they pay. This is good for consumers, honest businesses, and the marketplace as a whole. We have been clear from the start that SB 478 is a price transparency law that would apply to restaurants. Consumers are fed up with hidden fees. It is not a fair practice. SB478 empowers consumers by arming them with accurate information upfront, so that they can compare prices between merchants."
Senator Dodd went on to say that the time is now past to rework the language in the bill for restaurants but pointed out that had the restaurant industry participated in the legislative process when this bill was first presented; there would have been a potential to write in a workaround for restaurants.