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31 July 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

NOTE: We represent the owners and operators of hotels, restaurants, and other hospitality facilities. We do not represent consumers making claims against such businesses. When it comes to Junk Fee laws at the State or National level, we help the owners and operators of hotels and restaurants understand and comply with Junk Fee Laws. When consumers make claims against them, we advise owners and operators on strategies and defense of such claims.

Restaurants, Listen Up: Rethink How You Disclose Your Fees to Avoid Junk Fee Lawsuits

As lawyers who specialize in representing hospitality owners, developers, independent operators, and investors, we have a critical message for restaurants: it’s time to rethink how you disclose your fees. Recent changes in the legal landscape have significant implications for your operations, and compliance is no longer a matter of choice—it’s a necessity.

Immediate Statutory Requirements

Let’s dive right in. California Civil Code 1770 now mandates that all charges must be clearly and conspicuously disclosed. This isn’t a future requirement; it’s already in effect. If you’re not disclosing fees on your webpage or menu, you’re putting your business at risk. The penalties for non-compliance can be steep, including lawsuits that could cost you hundreds of thousands of dollars, even if you come out on top.

We’ve already seen several lawsuits filed under “bait-and-switch” pricing, which is prohibited in Civil Code § 1770(a)(9). The new California Junk Fee laws may have created more confusion than clarity. The litigation is just beginning under the new Civil Code § 1770(a)(29). The so-called “restaurant exemption” of SB 1524 may not be all it is cracked up to be. In fact, it may be a trap for well-meaning business people.

If you’re unsure what that means, check out the video below for a detailed explanation. CONTINUE READING →

Published on:

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23 July 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

NOTE: We represent the owners and operators of hotels, restaurants, and other hospitality facilities. We do not represent consumers making claims against such businesses. When it comes to Junk Fee laws at the State or National level, we help the owners and operators of the hotels, restaurants and hospitality facilities to understand and comply with Junk Fee Laws. When claims are made against them by consumers of competitors, we advise on strategies and defense of such claims.

On July 1, 2024, the first comprehensive Junk Fee Law in the United States took effect in California. It prohibits drip pricing, which involves advertising a price that fails to include all mandatory charges and fees a consumer must pay. It requires upfront disclosure of the total price of goods or services upon first contact with the consumer. It applies to the sale of most goods and services, with only a few exceptions. A last-minute restaurant exemption was rushed into law — only two days before the law’s effective date.

In a recent program hosted by myLawCLE, junk fee compliance and defense lawyers Jim Butler and Mark Adams presented an update on California and federal regulations regarding junk fees. SB 478, SB 1524, and AB 537 are all in the rearview mirror and the final impact of these bills on our current law is a leading topic of discussion during the webinar. Jim and Mark also analyzed HR 6543 and S 2498, and the FTC’s proposed rule on drip pricing and misleading business practices.

In other words, this course includesthe latest information on all the changes to the most significant Junk Fee regulation in California, Congress, and the FTC.

This webinar took place on Thursday, July 18, 2024. To access an on demand recording, click here.

We have special free passes available for our clients and industry friends. If you would like more information on these passes, please contact Laura Bailey at lbailey@jmbm.com. CONTINUE READING →

Published on:

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1 July 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

On July 1, 2024, California’s new Junk Fee Law took effect. It could have worldwide impact if prices for goods or services are publicly advertised and reach California residents. How can you avoid that with online ads and other public broadcasts over commercial media?

In anticipation of this event, many international hotel companies, cruise lines, travel providers, ticket sellers, and online sellers have already changed their advertising and promotions to comply with California law rather than risk violation. Watch for a big change to “transparent pricing” as you search online.

Take this short survey to double check your exposure

It is so much easier to prevent junk fee litigation than to defend it. Even if you “win,” it is expensive to fight government agencies. It can be worse combatting class action lawsuits by consumers with contingent fee plaintiffs’ lawyers. (Think of the 40,000+ lawsuits filed under the ADA and comparable state laws that provide for attorneys’ fees to plaintiffs)

Wakeup! It is July 1, and time to check the last-minute changes signed into law by the California Governor on June 29. Determine whether this law applies to you. Understand what it takes to comply or validly secure an exemption. Consider your answer to the following questions:

  • Do you offer hotel, restaurant, or short-term lodging facilities?
  • Do you offer consumers goods or services from California, or to California residents?
  • Are you going to rely on the restaurant exemption from the new law?

If you answered “yes” to any of these questions, consider a pro-active consultation to prevent unnecessary problems with the new California Junk Fee Law (as amended on Saturday, June 29, 2024).

Resources to help you avoid problems with California’s Junk Fee Law

The resources below provide the latest information on all the changes to the most significant Junk Fee regulation in California, Congress, and the FTC.

Free blog articles from the hospitality lawyers in JMBM’s Global Hospitality Group®. Extensive up-to-date blog articles, analysis and copies of the new laws and regulations.

Live Webinar (July 18, 2024) and On Demand recording. We have special passes for clients and friends of JMBM’s Global Hospitality Group®. Contact Laura Bailey

Event Details

Date: July 18, 2024
Location: Live Video-Broadcast
Time: 10 AM – 12:10 PM PST
Agenda and Registration: Click here

REGISTER NOW

We have special passes available for our clients and industry friends. If you would like more information on these passes, please contact Laura Bailey at lbailey@jmbm.com. CONTINUE READING →

Published on:

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29 June 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

Note: If you are a consumer with a Junk Fee issue, please do NOT contact us! We do not represent consumers. We represent owners, developers, lenders, and management of hotels, restaurants, and other hospitality-related properties. We advise them on litigation, labor, regulatory compliance, contracts, transactions, financing, development, and strategies.

Understanding California’s Landmark Junk Fee Law
Revisions to the Consumer Legal Remedies Act (CLRA)

Transparent pricing bans hidden fees and drip pricing
by

Jim Butler
Partner & Chair, JMBM’s Global Hospitality Group®

Mark S. Adams
Hotel Dispute Lawyer, Partner & Senior Member
JMBM’s Global Hospitality Group®

First, the nomenclature of the forbidden practices, then the names for the law, a summary of the latest events, and details of the final California Junk Fee Law. In this article, we will focus on the changes to the California Civil Code (CC), and particularly CC Section 1770) of the Consumer Legal Remedies Act (CC 1750, et eq.).

The bottom line: As of July 1, 2024, California’s new Junk Fee Law is a comprehensive transparency pricing law that eliminates hidden mandatory fees. It applies to all businesses in all industries, except for a few specific exceptions. Restaurants are exempted if they meet certain conditions. Restaurants may find compliance trickier than apparent at first glance, and even a modest consumer backlash for this special exemption may be harmful.

CA Governor signs SB 1524’s new Junk Fee Law with “Restaurant Exemption” (if certain tests are met). SB 478, SB 1524, and AB 537 all go effective July 1, 2024. Unfair business practices redefined in CC 1770.

California bans fees and practices known by many names — junk fees, hidden fees, mandatory fees, drip pricing, surcharges, resort fees, unfair and deceptive practices, bait and switch, and consumer fraud.

Names for the new 2024 California Junk Fee Law

There are so many names for the California law that is making big changes, primarily to Civil Code Section 1770. It may be helpful to list the most common names, which include:

  • Consumer Legal Remedies Act (CLRA)
  • California Junk Fee Law
  • California Honest Pricing Law
  • California Hidden Fees Statute
  • California Transparency Law
  • California SB 478
  • California SB 1524
  • California CC 1770
  • California Unfair Business Practices
  • California Unfair Competition Act
  • The price you see is the price you pay

Don’t forget AB 537 and its $10,000 civil penalties.

In addition to the amendments to California CC 1770, another Junk Fee law effective July 1, 2024, was introduced by Assemblyman Berman. He had a bad experience with a hotel “resort fee” he encountered in his private life. It led him to introduce the new law which adds a new Section 17586.6 to the California Business and Professions Code (B&P Code).

It is nicknamed the California Resort Fee Bill. It requires upfront price disclosure on first contact with consumers of all mandatory fees for all hotels, motels, and other short-term lodging rentals for less than 30 days. It carries a civil penalty of not more than $10,000 per violation. It extends to any advertisement, display, or offer of either from or into California.

It is also referred to as B&P Code Section 17586.6, and the Transparency in Short-Term Lodging Prices Act. CONTINUE READING →

Published on:

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27 June 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

Note: If you are a consumer with a Junk Fee issue, please do NOT contact us! We do not represent consumers. We represent owners, developers, lenders, and management of hotels, restaurants, and other hospitality-related properties. We advise them on litigation, labor, regulatory compliance, contracts, transactions, financing, development, and strategies.

On June 27, 2024, the California Senate unanimously approved SB 1524’s so-called “restaurant exception” from SB 478’s Honest Pricing Law. See, Junk Fee Law: Exception for California restaurants moves forward.

The Senate bill passed today was identical to the Assembly version passed on June 25, 2024. It was enrolled and presented to the Governor at 3:00 pm on June 27, 2024

If signed, as expected, the carve-out of restaurant surcharges from SB 478’s ban on California junk fees will become law immediately. The fast-track processing of the restaurant exemption will save the industry from the July 1, 2024, effective date for SB 478’s ban on drip pricing for most other businesses.

This exception enables restaurants, bars, and other food service businesses to continue adding mandatory fees to restaurant bills, without including them in the price of the food or beverage shown on a menu, advertisement or other display, as long as the mandatory charge is clearly and conspicuously displayed somewhere.

See Final Text of SB 1524 as passed by Senate and presented to the Governor 6-27-24.

CONTINUE READING →

Published on:

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25 June 2024 [updated 27 June 2024]

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

Note: If you are a consumer with a Junk Fee issue, please do NOT contact us! We do not represent consumers. We represent owners, developers, lenders, and management of hotels, restaurants, and other hospitality-related properties. We advise them on litigation, labor, regulatory compliance, contracts, transactions, financing, development, and strategies.

On June 25, 2024, the California Assembly unanimously approved emergency legislation in the form of SB 1524’s so-called “restaurant exception” from SB 478’s Honest Pricing Law. As the Senate’s concurring approval and the governor’s signature are expected by the end of the week, this emergency provision will be effective immediately and thus will prevent the Honest Pricing Law from applying to any restaurant, bar, food concession, grocery store, or grocery delivery service. [As noted below, on June 27, 2024, the Senate unanimously approved the bill, and it was presented to the Governor at 3:00 PM]

The political gymnastics to accomplish this result are extraordinary and somewhat controversial with consumer advocacy groups.

Mark Adams gives us the details of the situation.

Junk Fee Law: Exception to SB 478
for California Restaurants Moves Forward

by

Mark S. Adams
Hotel Dispute Lawyer, Partner & Senior Member
JMBM’s Global Hospitality Group

California restaurants are likely to avoid SB 478’s Honest Pricing Law effective July 1, 2024.

[Update note: The Senate unanimously approved the Assembly’s version of SB 1525 on June 27, 2024. The bill was enrolled and sent to the Governor at 3:00 PM on that date.]

In the morning hours of June 25, 2024, the California Assembly unanimously approved Senate Bill 1534, an emergency response to the special interests of restaurants and labor (the California Restaurant Association and UNITE HERE), exempting any “restaurant, bar, food concession, grocery store or grocery delivery service” from application of the SB 478’s Honest Pricing Law that was passed in last year to become effective on July 1, 2024.

It is too cumbersome to use the complete list of carveouts in this discussion. So, we will use the phrase “Restaurants and Bars” to refer to any exempted business in HR 1524’s list of any “restaurant, bar, food concession, grocery store or grocery delivery service”.

The State Senate is scheduled to approve SB 1524 in a concurrence vote this week, and send the bill to the governor for signature and immediate effectiveness. [Update: Senate approval was given.] CONTINUE READING →

Published on:

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17 June 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

Note: If you are a consumer with a Junk Fee issue, please do NOT contact us! We do not represent consumers. We represent owners, developers, lenders, and management of hotels, restaurants, and other hospitality-related properties. We advise them on litigation, labor, regulatory compliance, contracts, transactions, financing, development, and strategies.

As of July 2, 1024, California’s Business and Professions Code is amended to impose a civil penalty of up to $10,000 for each knowing violation of strict transparent pricing standards for short-term lodging.

AB 537 applies to any hotel, residence or other place offering short-term” lodging (for 30 days or less), as well as any person or entity advertising a short term lodging price in California or from California (such as an internet site or platform).

The new law will be enforced by city, county and state legal officers. There is not private right of action under this statute.

AB 537 requires transparent pricing for all short-term lodging
Effective July 1, 2024

by

Mark S. Adams
Hotel Dispute Lawyer, Partner & Senior Member
JMBM’s Global Hospitality Group

AB 537, the California Resort Fee Law is misnamed. It should be the “Transparent Pricing for Short-Term Lodging Law”

Assembly Bill 537 (AB 537) was signed into law by Governor Gavin Newsom on October 13, 2023. It becomes effective on July 1, 2024, and adds a new Section 17568.6 to the California Business and Professions Code applicable to all advertising for short-term lodging.

The bill was originally nicknamed the “California Resort Fee Law,” but it applies to so much more than just “resort fees.” It applies to any advertising of a rate or charge for short-term lodging (hotel, motel, residence or other place for 30 days or less) in this state or from this state

What activity is covered?

The amended B&P Code section applies to all advertising (in this state or from this state) for short-term lodging.

What is short-term lodging?

Short-term lodging is defined to include hotels, motels, bed and breakfast inns, or other transient lodging.

It also includes any residential property advertised on a centralized platform and rented to a visitor for 30 consecutive days or less.

Who is covered?

The law applies to all of the following:

  • Place of short-term lodging
  • Internet website, application, or other similar centralized platform — such as a brand website, Airbnb, Expedia, Travelocity, Hotels.com, hoteltonight.com, or other travel booking platforms
  • Any other person

What 2 things are required or prohibited to avoid violation?

There are two prongs or tests for transparency in short-term lodging under AB 537. It is a violation if a covered person does either of the following:

  1. Advertises a rate for the lodging, which does not include all mandatory fees, except taxes and government charges. (no drip pricing at any time)
  2. Takes a reservation from a consumer before disclosing the “total price” of the lodging with all taxes and government charges included.

AB 537 is the only legislation we know of that requires disclosure of all taxes and government charges before taking a reservation from a guest. CONTINUE READING →

Published on:

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13 June 2024
See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

Note: If you are a consumer with a Junk Fee issue, please do NOT contact us! We do not represent consumers. We represent owners, developers, lenders, and management of hotels, restaurants, and other hospitality-related properties. We advise them on litigation, labor, regulatory compliance, contracts, transactions, financing, development, and strategies.

HR 6543: The US Congress wants in on Junk Fee regulation for hotels

Over the past several weeks, we have written about recent major regulatory developments concerning Junk Fees, Hidden Fees, and Drip Pricing:

  • California’s SB 478, The California Junk Fee Law, Honest Pricing Law, Transparent Pricing Law or Hidden Fees Statute
  • California’s proposed SB 1524, which will carve out an exception for the restaurant industry from the application of SB 478, and an update on its
  • FTC’s proposed rule on Unfair or Deceptive Fees, adding Part 464 to 16 CFR, defining junk fees and drip pricing to be unfair or deceptive acts or practices under Section 5(a)(1) of the FTC Act (15 U.S.C. 45(a)(1)

We now turn our attention to the very latest – the Federal proposed “No Hidden FEES Act of 2023”.

The House passes HR 6543 and enters the ring to regulate Junk Fees
for hotels and short-term lodging

by

Mark S. Adams
Hotel Dispute Lawyer, Partner & Senior Member
JMBM’s Global Hospitality Group

On June 11, 2024, the United States House of Representatives passed HR 6543, the so-called “No Hidden FEES Act of 2023” which introduces federal regulations aimed at enhancing transparency and fairness in the advertising of hotel room and short-term lodging prices. A critical component of this Act is its preemption clause, found in Section 4(a), which establishes a national standard prohibiting states from enforcing any laws that conflict with the federal mandate. This provision has significant implications for state regulations, such as California’s SB 478, which also aims to protect consumers from hidden fees in various transactions. The scope and application of this preemption clause are essential for assessing how state laws will be affected and ensuring compliance with the new federal standards.

Below, we compare the No Hidden FEES Act of 2023 to the Proposed FTC Rule on Junk Fees and California’s SB 478: CONTINUE READING →

Published on:

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10 June 2024
See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

Note: If you are a consumer with a Junk Fee issue, please do NOT contact us! We do not represent consumers. We represent owners, developers, lenders, and management of hotels, restaurants, and other hospitality-related properties. We advise them on litigation, labor, regulatory compliance, contracts, transactions, financing, development, and strategies.

Mark S. Adams is the go-to senior lawyer in JMBM’s hospitality litigation team for assessing legal exposure, pursuing legitimate claims, and defending a client’s rights involving hospitality matters.

Jim Butler caught up with Mark to find out what all the fuss is about over California’s Junk Fee law (SB 478) and a proposed amendment by SB 1524 that has consumer advocates for transparent consumer prices in an uproar.

Jim Butler

 

 

 As a hospitality litigator and advisor, you have been at the forefront in junk fee matters for many years, and have written extensively about the latest developments.

Tell us what all the fuss is about concerning the California Junk Fee Law.
Mark S. Adams

 

 

 

 

 

 

 

 

 

 

 

 

 In October 2023, California passed a law (SB 478) that declared junk fees to be a prohibited, misleading business practice. Anyone who advertises a price for goods or services must provide the total cost on first contact. In other words, drip pricing is illegal. Sellers cannot use a come-on price to get attention with later disclosure of additional mandatory fees or charges.

See California bans Junk Fees as of July 1, 2024. Good bye to junk fees, resort fees, mandatory service charges, and drip pricing. Hello to – the fruits of SB 478.

California was the first state in the country to adopt such a comprehensive law, and it was widely hailed as a consumer victory. However, the substantive provisions of the California Junk Fee law are scheduled to become effective on July 1, 2024. And on June 6, 2024, William Dodd (with the support of the California Restaurant Association) introduced SB 1524 to exempt the restaurant industry from the California Junk Fee Law.

See Pricing transparency without hidden mandatory junk fees. Does this apply to restaurants too? New California proposed law (SB 1524 ) says “No!” Can this be right?
Jim Butler

 

 Isn’t this blatant preference of special interest legislation over consumer protection?
Mark S. Adams

 

 

 

 

 

 

 

 

 

 

 

 I have seen some strong criticism of the proposed SB 1524 as special interest legislation gutting landmark consumer protection. It certainly does make the playing field uneven. We have heard complaints from many other businesses affected by SB 478 who are not getting similar benefits. Just ask hotel owners or ticket sales companies.

Before Senator Dodd’s latest proposal, there were a couple of exemptions in SB 478 for certain highly regulated businesses who comply with their primary regulator’s detailed rules (such as broadband services complying with FTC regulations, or financial entities complying with relevant regulations such as the Financial Code, Truth in Lending or the Federal Reserve Act).

But SB 1524 is an outright exemption from SB 478 for any “items sold by a restaurant, bar, or other food service provider, or pursuant to a contract for banquet or catering services.”

The bill would permit drip pricing, as long as the additional mandatory fees are conspicuously set out in the advertisement, menu or other display.
Jim Butler Doesn’t that provision gut SB 478?
Mark S. Adams

 

 

 

 

 

 

 

 

 

 

 

 

 Yes and no. It does exempt the restaurant industry from SB 478’s ban on junk fees, as long as the service charge or administrative fee or health compliance charge is disclosed. The consumer is not entitled to get the total cost on first exposure to price, as she would be if looking at a promotion for a hotel stay. Some people feel this is a violation of the honest pricing or transparent pricing mandate behind the reform legislation.

But unless further amended, as of July 1, 2024, SB 478 will affect every other business dealing with California consumers. Of course, most of these other affected businesses feels this is unfair. Most of them disclose various mandatory fees somewhere in the sale process. It is just that they disclose them after the initial advertised price, and after the consumer has invested time in researching the goods or services, or filling in required information to get to a form. Hiding the additional fees just frustrates open competition and makes it difficult for consumers to make wise decisions.

SB 478 is only gutted as to the restaurant industry. It applies to everyone else. Is that fair? Does that serve the public?

I guess we will have to see what the California legislature decides.

California DOJ SB 478 FAQs

Anticipating the effectiveness of the law, on May 8, 2024, the California Department of Justice released a set of SB 478 Frequently Asked Questions (SB 478 FAQs) to provide guidance on the law.

Although these SB 478 FAQs may become moot as to restaurants, they will continue to apply to all other businesses, unless exempted.

 

CONTINUE READING →

Published on:

By

6 June 2024
See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

Note: If you are a consumer with a Junk Fee issue, please do NOT contact us! We do not represent consumers. We represent owners, developers, lenders, and management of hotels, restaurants, and other hospitality-related properties. We advise them on litigation, labor, regulatory compliance, contracts, transactions, financing, development, and strategies.

Pricing transparency without hidden mandatory junk fees. Does this apply to restaurants too? New California proposed law (SB 1524 ) says “No!” Can this be right?

by

Mark S. Adams
Hotel Dispute Lawyer, Partner & Senior Member
JMBM’s Global Hospitality Group

For more than 20 years consumers have complained about hidden mandatory fees, junk fees, resort fees, destination fees, service fees, administration fees, health fees, surcharges, connection fees, and similar charges, whatever they are called.

California’s new “Honest Pricing Law,” SB 478, cracks down on hidden fees, requiring businesses to advertise and list a price that includes all mandatory charges. This applies to most goods and services, but a new bill, SB 1524, proposes an exception for restaurants.

SB 478: Transparent Pricing and the End of Junk Fees

SB 478, taking effect July 1, 2024, prohibits businesses from advertising a misleadingly low price and then tacking on hidden mandatory fees at checkout. This includes service charges, resort fees, and other surprise surcharges. Consumers have long complained about these “junk fees,” and SB 478 aims to create price transparency. California’s Civil Code Section 1770(a)(29), amended by SB 478, prohibits unfair business practices like misrepresenting product qualities. Importantly, it requires businesses to advertise prices that include all mandatory fees, excluding only government taxes and reasonable shipping costs. This transparency aims to protect consumers from unexpected charges. Certain industries, like those complying with FCC regulations for internet access or those already subject to federal and state disclosure laws for financial services, are exempt from this specific provision.

SB 1524: A Special Exception for Restaurants?

Introduced on June 6, 2024, SB 1524 would allow restaurants to continue adding mandatory service charges, gratuities, and other fees on top of their advertised prices, as long as these fees are clearly disclosed on menus or advertisements. The proposed amendment to Civil Code 1770, would add a new subsection 29(D) to exempt restaurants from the transparent pricing mandate of in that section by adding this language:

(D)  For purposes of this paragraph, “advertising, displaying,  or offering a price for a good or service” does not include advertising or displaying the price of individual food or beverage items sold by a restaurant, bar, or other food service provider, or sold pursuant to a contract for banquet or catering services, provided that any service charge, mandatory gratuity, or other mandatory fee or charge is clearly and conspicuously displayed on the advertisement, menu, or other display.

The Debate: Transparency vs. Industry Flexibility

This exemption has raised concerns about consumer protection and a level playing field for businesses. SB 1524’s proponents, including the restaurant industry and the labor union UNITE HERE, argue that it allows restaurants flexibility in covering costs like employee benefits. Opponents argue that this exemption undermines the core purpose of SB 478 – price transparency for consumers. They question why restaurants should be treated differently from other businesses and point out the Federal Trade Commission’s stance that hidden fees are deceptive practices. CONTINUE READING →

Contact Information
Jim Butler, Chairman
Global Hospitality Group®
Jeffer Mangels Butler & Mitchell LLP
(310) 201-3526 • jbutler@jmbm.com
www.HotelLawyer.com

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