How Minnesota's Junk Fee Legislation Could Affect Restaurant Orders
Even if you do your due diligence before ordering a meal at a restaurant -- tallying up the prices of menu items, factoring in the taxes and gratuity -- you may still be caught off guard once the check arrives. It's become an all too common experience to get hit with hidden fees you weren't informed about ahead of time, and lawmakers are starting to step in.
Recently, the United States has seen some legislation aimed at taking down what are known as junk fees, i.e., unexpected charges tacked onto the price of a good or service that significantly increase the amount a customer must pay. Following a similar move by California officials, Minnesota Governor Tim Walz signed a bill this week that, starting next year, will require businesses in the state to be upfront about any additional fees it may include on a consumer's final bill. It also bans ambiguous surcharges like service fees and health and Wellness fees, which essentially shift the responsibility of providing worker benefits off of businesses' budgets and onto customers' wallets.
The food industry certainly isn't the only area of commerce where junk fees are an issue -- concert ticketing platforms, airline companies, and hotels are among the other businesses make use of them. They are also being targeted by the legislation in Minnesota and California. However, these new passed laws are likely to affect restaurants in more ways than one.
Read more: Restaurant Foods That Always Taste Better Than What You Make At Home
Customers Will Have More Clarity On Ambiguous Fees
For one thing, those service charges and worker benefit fees will have to be absorbed into restaurants' overall operating costs, which may very well result in higher menu prices. And since the Minnesota law does allow for establishments to set mandatory gratuity charges, so long as they are communicated to diners ahead of time, some restaurants may also increase those percentages in order to fill the gap in compensation for their employees. Nevertheless, the fact that the mandatory gratuity will have to be clearly spelled out before orders are placed should help alleviate consumers' confusion over whether or not they have to tip on top of those presently put in place service fees when they receive their bill.
While the Minnesota law, which goes into effect on January 1, 2025, won't do away with all the fees accrued through ordering apps. Those platforms will have to disclose all of the mandatory charges applied by both the app and restaurant before the customer reaches checkout. Still, this new legislation is designed to protect consumers and save them money. In a press release shared by his office on May 20, Governor Walz emphasized the importance of transparency when it comes to these charges, which can cost customers "thousands of dollars a year" and prevent them from making fully informed purchasing decisions. "This bill is going to protect Minnesotans' bottom line, provide clarity for consumers, and ensure companies aren't using deceptive practices to rip their customers off," Walz said.
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