Business
What does a service fee ban mean for diners? Expect higher menu prices — a lot higher
Coming this summer is a new state law that bans unadvertised service fees, surcharges and other additional costs that are added to the end of a bill for meals or delivery service.
On July 1, Senate Bill 478, which Gov. Gavin Newsom signed into law in October, is set to prohibit “junk fees” across a wide swath of businesses, including online ticket sales, hotels, restaurants, bars and delivery apps.
Sens. Bill Dodd (D-Napa) and Nancy Skinner (D-Berkeley), who co-wrote the bill, say it will offer greater protections for consumers.
“These deceptive fees prevent us from knowing how much we will be charged at the outset,” Atty. Gen. Rob Bonta, who co-sponsored the measure, said in a statement the day it was signed. “They are bad for consumers and bad for competition. … With the signing of SB478, California now has the most effective piece of legislation in the nation to tackle this problem. The price Californians see will be the price they pay.”
Many owners of restaurants and bars rely on now-ubiquitous surcharges to offer employee benefits such as healthcare and higher wages and often note surcharges on menus; some are listed as “elective,” left to the discretion of the diner. As implementation of the law looms, some now say the consequences could be disastrous and “upend” the industry.
The restaurants will need to factor surcharge fees into menu prices, as opposed to simply advertising them at the end of a bill, state officials said.
“At this point, we are going to have to raise our prices a big chunk,” said James Beard Award-winning restaurateur Caroline Styne, co-owner and wine director of the Lucques Group of restaurants and wine director of Hollywood Bowl Food & Wine.
For instance, the famous Ode to Zuni roast chicken with fennel panzanella at A.O.C. is currently priced at $39 and will likely rise to $49 once the law goes into effect, she said.
“Restaurants are in a very tough spot right now,” Styne added. “We’ve really been under tremendous pressure … most restaurants are hemorrhaging money.”
Although most new laws in California take effect on Jan. 1, the delayed implementation was intentional, allowing more time for restaurants, bars and other businesses to adjust accordingly, according to a representative for the attorney general’s office. Clarifying materials on the new law are also expected to be published by the state before July 1.
“SB478 is about greater transparency for consumers and clear communication about the actual cost of goods and services,” a spokesperson told The Times in a statement.
Previous statements from the attorney general’s office said SB478 would not “bar restaurants from charging service fees,” the San Francisco Chronicle reported last fall. “Those fees, however, must be disclosed (so they are no longer hidden) in restaurants’ advertised prices.”
Now, according to the office of the attorney general, restaurants and bars will still be able to advertise surcharges and other fees on the menu but they must be included in menu prices from the outset. A representative of the office declined to address how or whether elective fees would be addressed in the new law.
For customers, that might mean sticker shock when a $35 menu item in theory could now be listed at $42; for many restaurants, the fallout could be a decrease in business. Rolling surcharges or fees of 1% to 20% or more into menu pricing could also trigger other business costs.
Styne said the new law will only precipitate the closure of more restaurants, which are still recovering from the pandemic and summer strikes.
FTC cracks down on junk fees
California’s law could have national implications. Days after Newsom signed SB478, the Biden administration announced “new efforts to crack down on junk fees and bring down costs for American consumers” in collaboration with the Federal Trade Commission. The new FTC regulation would prohibit “omitting” and “misrepresenting” fees from the total cost of goods.
“It’s a very similar approach at a federal level,” said Laurie Thomas, executive director of the Golden Gate Restaurant Assn. “If the playing field is level across the United States, is it going to hurt restaurants?
“I think that in areas like San Francisco that have higher mandated laws that put costs on small restaurants — the extra healthcare spend, the extra sick pay, the extra paid family leave — all the stuff we pay for that people aren’t even aware of, it’s gonna have to make us put prices higher.”
Her organization represents roughly 800 restaurants in San Francisco and has been attempting to advise and prepare restaurateurs on how to comply with the new legislation. Thomas said she has been seeking clarity on California’s rule since October, with little directive from the state on how restaurants should proceed.
“A lot of people are reaching out for clarity,” she said. “There’s a lot of frustration. It’s not going to drop the price of dining out. What it might do is close more restaurants. But maybe people don’t care about that anymore.”
Service charge controversy
Service fees have become a point of contention for diners, food workers and restaurant owners. In June, former servers at Jon & Vinny’s, a popular Italian American restaurant, filed a class-action lawsuit in Los Angeles Superior Court against its owners, Jon Shook and Vinny Dotolo, alleging that their company denied servers tips, resulting in a reduction of take-home pay, due to diner confusion regarding an 18% service fee.
The restaurant owners subsequently changed the language at the bottom of customer bills regarding the fee: “The service charge is not a tip or gratuity, and is an added fee controlled by the restaurant that helps facilitate a higher living base wage for all of our employees. Please scan the QR Code at the top of the receipt for additional information, or speak with a manager.”
Last month, a former server at Found Oyster launched a class-action lawsuit against parent company Last Word Hospitality, alleging that the firm wrongfully withheld tips in the form of service fees. The complaint was filed in Los Angeles County Superior Court.
Kato restaurateur Ryan Bailey is aware of the scrutiny and said it’s possible that some operators are “misusing the service charge.” But most, he believes, are distributing them correctly and relying on them to keep their businesses and employee benefits running smoothly.
“Every restaurateur that I know who cares in this industry is using it in a way that is so immensely appropriate and responsible and forward thinking that if it was to go away, it would be really crippling to everybody,” Bailey said.
“We have people who have progressed from entry level positions into management positions because they felt that we are taking care of them and care about their financial stability. It has allowed us to make the workweek a 40-hour workweek,” rather than the industry norm of a patchwork of hours or otherwise part-time shifts for servers and back-of-house employees, he added.
At Kato, the No. 1 restaurant in the city, according to The Times’ 2023 101 Best Restaurants list, Bailey said the 18% surcharge helps pay for an employee benefit package that includes mental, medical, dental and vision insurance. It also balances pay on slow nights.
Food delivery apps will function differently under the new law.
According to the attorney general’s office, these apps must list the price for delivery costs and all other fees; services such as delivery cannot be advertised as free or at a given amount, with additional miscellaneous fees tacked on at the end of the transaction. However, unlike with restaurants, previously listed surcharges or service fees cannot be built into the item price. Assembly Bill 2149, also referred to as the Fair Food Delivery Act of 2020, states that menu prices are set by the participating restaurants on the platforms and cannot be inflated by delivery services.
A representative for Postmates and Uber Eats, which are both owned by Uber, said that the listing of prices is already compliant with the new law and that the company worked directly with lawmakers to ensure compliance. Last year, a statement from DoorDash said, “There are no hidden fees, junk fees or surprises at checkout. We’re upfront on pricing.”
For some apps such as Postmates, applicable fees are detailed by pressing the small “i,” or “info,” button next to “delivery fee” or “taxes & other fees” in the checkout cart. DoorDash exercises this same checkout format, as well as breaks down possible charges via a small “pricing & fees” button near the top of each restaurant’s listing.
When asked whether this is acceptable procedure as is, as well as how the practice differs from restaurants and bars listing surcharges and fees on menus, a representative for the attorney general said, “We are unable to provide legal advice or analysis.”
“Fees help us operate the DoorDash platform, ensure Dashers are paid fairly, and offer merchants tools to grow their businesses,” a spokesperson for DoorDash wrote in a statement to The Times. “That said, we are always working to make our platform more transparent and affordable and we never surprise consumers with hidden fees or junk fees. Consumers always see what they will pay — multiple times — before checkout on our platform.”
For restaurants, the law will also prohibit a common 18% service charge on parties of six or more. Styne characterized the change as unfair, since additional labor has to be provided with such large parties. The restaurant shouldn’t have to absorb that additional cost, she argued. A senate official told The Times that they were awaiting clarification from the attorney general’s office regarding the law’s inclusion of large-party surcharges.
Rising labor costs, high taxes and tight regulations paired with razor-thin profits have made California a tough place for restaurants to stay open, Styne said. “There are a lot of businesses that will be upended by this.”
Cindy Carcamo contributed to this report.
Business
Commentary: It’s not just vaccines — from infancy to adolescence, Republicans are waging war on children’s health
The conservative assault on child health starts with the anti-vaccine campaign and proceeds to cutbacks in nutrition assistance and narrowed access to healthcare.
In the old days, before accepted medical protocols came under partisan assault, infants typically received a vitamin K shot to enhance blood-clotting capability and a few drops of an antibiotic to stave off eye infections before leaving the hospital, followed by a thorough round of vaccines against life-threatening diseases.
Americans assumed that “whatever a family could afford, the country had already decided this child was worth protecting,” Robert B. Shpiner, a critical care expert at UCLA medical school, wrote recently. “I have seen children harmed by disease, poverty, by bad luck. I had not, until now, seen them harmed so methodically by their own government.”
Shpiner’s targets were the changes in healthcare policies instituted by the Trump administration generally and Health and Human Services Secretary Robert F. Kennedy Jr., as well as the mistrust in medical authority that Kennedy and his followers have helped to foment.
We’re going to be paying this bill for years to come, because the lack of proper nutrition has profound effects on learning and disability.
— Robert B. Shpiner, UCLA
As Shpiner wrote in the Guardian, the administration’s assault on child health begins with its anti-vaccination policies. In January, Kennedy’s agency reduced the list of recommended childhood immunizations to 11 from 17, removing shots for COVID-19, hepatitis and meningitis, among other diseases. The agency made the changes without the customary professional consultations, KFF has reported.
But that’s only the tip of the iceberg. “It’s just one thing after another,” Shpiner told me.
What triggered him into writing his Guardian essay, he says, was learning that congressional Republicans had advanced an agriculture appropriations bill that would cut the fruit and vegetable benefit for children in WIC, the supplemental nutritional program for women, infants and children to $10 a month from $26.
“That got me to looking at this as a sequence,” he says, starting with the reduction of child immunizations, followed by the proposed cuts in WIC and the cuts in food stamps enacted as part of the Republican budget bill that Trump signed one year ago Saturday (i.e., the Fourth of July, 2025).
“The image of us taking food away from kids and not giving them enough money to buy some apples and berries—the short-term response is outrage,” he says, “but the medium- and long-term effect is that we’re going to be paying this bill for years to come, because the lack of proper nutrition has profound effects on learning, and disability and anemia. A number of measures of health and success match with nutrition.”
At almost every stage of childhood development, he notes, programs aimed at preserving or enhancing children’s health have gone on the chopping block.
“A vaccine rule one week, a food program the next,” he wrote. “Each change arrives wrapped in a reasonable rationale: fiscal discipline, local control, parental choice. But arrange them in the order a child actually grows, and the rationales stop mattering.”
Judging from their rhetoric, one would think that Republicans would move heaven and earth to foster child immunizations, nutritional assistance and access to medical care.
In “Communion,” his recent book about his conversion to Catholicism, for example, Vice President JD Vance writes: “We want more children in our society because children are profoundly good — the greatest value add we can create.”
Yet the programmatic cutbacks advocated for and implemented by the Republican Congress and Trump give the lie to that sentiment. Let’s examine chapter and verse.
Measles is the canary in the coal mine for vaccination and public health, and at this moment, the canary is singing a doleful tune. The Centers for Disease Control and Prevention count 2,134 cases in the U.S. as of June 25. That’s poised to exceed the 2,288 cases in all of 2025, which was the worst outbreak since 1991.
There’s no question why this is happening. It’s because of a decline in measles vaccinations below the 95% generally considered to provide “herd immunity,” in which the disease is so rare that even unvaccinated individuals are protected from exposure.
Kennedy may not deserve all the blame for the immunization decline, but as pseudoscience debunker Steven Novella has pointed out, as secretary he has “done everything possible to undermine vaccine science and confidence in health institutions.”
Kennedy has paid lip service to the value of the MMR vaccine, which combines immunizations for measles, mumps and rubella. But he has claimed without evidence that the vaccine causes deaths “every year” and that the vaccine hasn’t been safety-tested, which isn’t so. He has asserted that it shouldn’t be subject to a government mandate. He also has promoted treatments for measles that aren’t known to be effective.
(The Department of Health and Human Services didn’t respond to my request for comment on the vaccine initiatives.)
As children grow, the crisis of malnutrition kicks in. The House GOP’s cuts to WIC are still only on the drawing board. But the Republican budget bill incorporated cuts to food stamps — the Supplemental Nutrition Assistance Program, or SNAP — that have driven some 4 million people off the program. In 13 states that have published data, according to the Center on Budget and Policy Priorities, child enrollment fell by more than 800,000, or 16%, between July 2025 and May of this year.
“This is where the nutrition cuts become a medical, not merely a moral, story,” Shpiner says. “Iron-deficiency anemia in infancy is associated with poorer cognitive, motor, and behavioral outcomes that persist more than 10 years after the deficiency itself has been corrected — the deficit does not fully reverse even with later treatment. Withdrawing produce and protein from WIC and SNAP at the peak window of brain growth is not a budget line that resets the following year; it is a developmental exposure with a long tail.”
The combination of reduced immunization and poor nutrition build on each other. “Unvaccinated kids are going to get sicker,” he told me. “If they’re malnourished, they’re going to get sicker. If their parents don’t get affordable care, they’re going to be strapped. It becomes a synergistic and multiplicative cascade.”
Indeed, the administration’s assault on Medicaid and the Affordable Care Act intensifies the damage. Enrollment in Medicaid and the Children’s Health Insurance Program, which is part of Medicaid, fell by 4.8 million people, or 6%, from March 2025 through March 2026, according to government data. The enrollment decline for children alone came to more than 1.9 million, or 5%.
White House spokesperson Kush Desai challenged the latter figure when I asked for comment. But it came from KFF, which sourced it to the government’s Centers for Medicare and Medicaid Services, or CMS.
“Nothing has been done to alter insurance or Medicaid coverage of any vaccination,” Desai told me by email, “and parents are encouraged to seek out the counsel of their pediatrician to make the best decisions for their children.”
The prospects are for further declines. That’s because new work requirements for enrollees in Medicaid expansion under the Affordable Care Act are almost certain to drive enrollment down, due to obstacles including paperwork burdens and administrative snafus, resulting in even some eligible enrollees losing their coverage.
(These problems became so pronounced in Arkansas, which implemented work requirements during the first Trump term, that a federal judge axed the program.)
The work rules enacted last year as part of the Republican budget bill aren’t scheduled to start until Jan. 1, but three states are starting early — Nebraska (May 1), Montana (Wednesday) and Iowa (Dec. 1). The impact on enrollment isn’t yet clear.
Whatever the effect of these changes, the public is going to know less about them than before. The reason is that the administration has shrunk the requirements for reports of immunization from states, changing the reports from mandated to voluntary. The affected data include childhood immunization rates against diphtheria, tetanus, pertussis, polio, measles, mumps and rubella, hepatitis, chicken pox and flu; and rates for 13 year olds and expectant mothers.
“While seemingly a small, technical change, the removal of vaccine reporting in Medicaid and CHIP may make it more difficult to monitor and understand vaccination trends for a large share of children in the U.S.,” KFF noted.
I asked the Department of Health and Human Services to explain the rationale for these changes, and specifically whether they were aimed at obscuring the effect of the narrowing of vaccine recommendations, but didn’t hear back.
Business
How the FIFA World Cup is providing a boost for L.A. businesses
Johnny Beig may have played in a semi professional cricket league in Australia, but this summer he’s a big fan of soccer in the United States.
It’s not just because he’s rooting for the World Cup team, though.
FIFA emblems are featured on jerseys that were created by the Dioz Group and distributed for all employees at the 16 FIFA World Cup venues this summer.
(Genaro Molina / Los Angeles Times)
Last year, Beig’s Beverly Hills-based company, Dioz Group, won a $2.5 million contract with On Location, FIFA’s hospitality partner, to design, manufacture and distribute uniforms for all employees working at FIFA World Cup venues this summer.
These include the people welcoming attendees into stadiums, VIP lounge chefs, waiters and the flagbearers during the opening ceremony.
After a multi-step application process, including presentations of its planning and strategy, Dioz says it produced more than 50,000 clothing garments including suits, jackets, shirts and hats and delivered them to the 16 World Cup venues around the U.S., Canada and Mexico in June.
Thanks in part to the World Cup contract, the company’s revenue has reached $15 million so far this year, compared with $20 million last year, Beig said. He declined to disclose the company’s net income but said the business was profitable.
“We are working with larger names that we would have never imagined we would,” he said. “The FIFA World Cup is the pinnacle. Working with the largest sporting event in the world is what we’re very proud of. I don’t think it gets any bigger than that.”
Volunteers line up to prepare to display the Canadian flag before a World Cup round of 32 knock-out match between Canada and South Africa at SoFi Stadium on Sunday.
(Kelvin Kuo / Los Angeles Times)
Dioz is among the many small businesses across Los Angeles that are getting a boost from the global sporting event, said Kevin Klowden, a senior fellow at the Milken Institute.
The influx of hundreds of thousands of fans into the city has been a boon to hotels, transportation services and restaurants, in addition to those in the special events and logistics economy, Klowden said, calling the event the “equivalent of multiple Super Bowls.”
“The number of contracts that are there, it’s a big deal,” he said. “Given the fact that L.A.’s filming is only slowly recovering, having something like the World Cup is definitely a boost.”
Dioz was co-founded by Johnny, 44, and his brother Tony in 2006. The brothers were born in India and raised in Australia, where Johnny enjoyed a brief career as a semi professional cricket player.
He realized his future wasn’t as a professional athlete, but he wanted to stay connected to the sports world, so he began making uniforms for his cricket team in 2006.
He then got a referral to make uniforms for multiple teams in the area before starting an apparel company.
“I wanted to stick with something I was passionate about, which is sports,” he said.
Volunteers unravel the center field display before a World Cup round of 32 knock-out match between Canada and South Africa at SoFi Stadium on Sunday.
(Ronaldo Bolanos / Los Angeles Times)
In 2012, Beig moved to Los Angeles and established Dioz‘s Los Angeles headquarters to tap into the U.S. market. During the pandemic, the company started supplying medical apparel to hospitals and schools, and the business took off, with revenue doubling in 2020, Beig said.
Dioz now has over 150 employees, including 15 in L.A., and manufactures its apparel at factories in China, India, Bangladesh, Turkey and the Philippines. Tony runs an office in Dubai.
Before the World Cup, Dioz provided employee uniforms for events including Super Bowl LIX and Copa America, which may have given it a leg up on the FIFA contact.
Now, with a World Cup contract on their resume, Beig said he’s setting his sights on even bigger events.
“This gives us an edge over the next FIFA events worldwide as well, where we can showcase our skills and we can handle it,” Beig said. “So it gives us a good opportunity to work with sporting events like the UEFA Championship and Premier League.”
As companies get new business from the World Cup, Klowden said it’s important that they leverage their new position to continue that growth.
Companies that benefited from the World Cup might be in a position to bid on even bigger contracts, especially with the Olympics coming up in 2028, Klowden said.
“The really important part in any of these deals is that if a company ran something like this, then they are able to build off of that success,” Klowden said. “Let’s say you’re a company that did a big uniform order or a big food order, and the World Cup goes, and you invested in new manufacturing capacity, or you invested in new clothing machines, or whatever you do; suddenly you don’t have that market anymore, then you’ve just wasted all that money ramping up.”
Business
Home insurer surcharges for wildfires is legal, judge rules
Surcharges that California homeowners have been hit with statewide by insurers defraying the costs of Los Angeles County’s wildfires were ruled legal in a decision released late Tuesday.
L.A. County Superior Court Judge Tiana Murillo turned down a petition by advocacy group Consumer Watchdog to halt the charges, which insurers began levying last year after the state’s insurer of last resort couldn’t pay all its January 2025 fire claims.
The California FAIR Plan, financially backed and operated by the state’s licensed home insurers, needed a $1-billion bailout from the insurers after it was hit with some $4 billion in claims.
Under a deal Insurance Commissioner Ricardo Lara worked out with the FAIR Plan in 2024, the insurers could seek state approval to surcharge their residential policyholders for up to half of any assessment totaling $1 billion in case the plan needed a bailout in an “extreme worst case scenario” — as it turned out it did.
A total of 105 insurers, including State Farm General — California’s largest home insurer — Farmers and Mercury sought and received approval for the surcharges.
Because the FAIR Plan assessed its member insurers based on their share of the state’s home insurance market, the policyholder surcharges were in the same ballpark. The median fee for homeowners was $28, according to the department of insurance.
The fee can be more or less according to the size of a homeowner’s premium and is split into monthly payments that insurers can spread over one or two years. Condo owners and renters on average were surcharged less.
In a court filing, Consumer Watchdog said $420 million in surcharges were approved.
In its April 2025 lawsuit filed against Lara, the Los Angeles group made a series of arguments in seeking to overturn the residential surcharges, which it deemed an industry bailout. It did not sue over related commercial surcharges.
Consumer Watchdog contended in its lawsuit that the surcharges violated Proposition 103 — the 1988 measure that governs insurer rate hikes — because the proposition does not allow for them.
It also claimed Lara did not follow regulatory protocol in promulgating the new policy.
The group further alleged that the FAIR Plan’s governing statutes do not give Lara the authority to permit the surcharges — and that the statutes require insurers to share in the plan’s profits and losses, and not shift losses to policyholders.
Murillo, and another judge who previously heard the case, turned down all of the consumer group’s arguments in separate rulings, the last of which Murillo issued Tuesday night.
Lara celebrated his legal victory over Consumer Watchdog, which has accused Lara of having close ties to insurers and sought to oust him from office. His terms ends in January.
“This victory sends a loud and clear message: The era of allowing special interests to derail consumer choice is over. We have the momentum, we have the authority, and we will continue to fight until every Californian has access to the coverage they deserve,” Lara said in a statement.
Attorney Will Pletcher, litigation director of Consumer Watchdog, said the group disagreed with the decision and would “consider all options to move this forward.”
“It’s important to try to protect California consumers from these surcharges that we think are in pretty clear conflict with both Proposition 103 and the FAIR Plan,” he said.
Hilary McLean, a spokesperson for the plan, said in a statement it did not have any position on the ruling, given the plan “does not have a role in determining how insurers manage costs associated with assessment.”
Denni Ritter, vice president of state government relations for the American Property Casualty Insurance Assn., a major industry trade group, said the decision rejected “the reckless lawsuit brought by the self-interested group Consumer Watchdog…”
“This ruling preserves a vital tool to protect the stability of the California insurance market. Blocking cost recovery would have undermined the state’s last-resort coverage option,” she said in a statement.
The 2024 policy was issued in response to the rapid growth of the plan due to a series of wildfires over the last decade that prompted multiple insurers to retreat from the state’s home insurance market.
The plan had 264,000 homeowners on its rolls in September 2022, a figure that rose to 452,0000 in the months before the fires — and its residential policyholders have since increased to 663,000 as of March.
The FAIR Plan offers policies that typically cost more than those issued by regular insurers while offering less coverage.
A Times analysis last year found that in the Palisades and Eaton fire zones, the plan’s rolls nearly doubled to 28,440 from 2020 to 2024.
That concentration of policyholders led to the plan’s large losses during the Jan. 7 wildfires, which damaged or destroyed more than 18,000 structures, killing at least 31 people.
It’s been estimated that the insured losses for the wildfires could ultimately total as much as $40 billion, exceeding any past wildfires worldwide. Ritter said that so far insurers have paid $23.7 billion in claims.
The 2025 wildfires were not the only time the FAIR Plan has needed a bailout, though it is the first time its member insurers surcharged policyholders.
In 1993, it assessed carriers after fires in Altadena and Malibu, and in 1994 it did so after the Northridge earthquake. The assessments totaled $260 million.
The plan received approval this year from the insurance department for a 29% rate increase for its homeowner dwelling policy that will take effect in October.
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