‘Disturbing news’: San Francisco restaurants dread new state law banning service fees
George Chen, chef and owner of China Live, levied a 20% service fee on customers upon reopening in 2020 after a temporary pandemic closure to sustain livable wages for his staff amid widespread industry layoffs.
Chen said the extra money has helped maintain salaries across the board at the sprawling Chinatown restaurant, and he’s seen 95% retention among his staff since he instituted it.
But a new state law slated to go into effect on July 1 would effectively outlaw such surcharges, doing away with what has become an increasingly common method of boosting restaurant wages amid rising costs and creating pay equity among front- and back-of-house staffers.
According to statements from the state Attorney General’s Office, California restaurants will no longer be allowed to add surcharges to customers’ bills, even if they are clearly marked on menus.
That means nixing the near-ubiquitous 5% SF Health Care Security Ordinance surcharge, which is tacked onto bills to help cover the cost of city-mandated health coverage for employees, as well as service fees that have replaced tips at many local restaurants.
